Summary of recent events this week (Dec.14-18,1998)...
Some significant industry announcements were made this week that may have some impact on AFC.
1) NEW YORK – DECEMBER 17, 1998, WINSTAR COMMUNICATIONS, INC.
(NASDAQ: WCII) and WILLIAMS COMMUNICATIONS, INC., a subsidiary of WILLIAMS (NYSE: WMB) announced two major agreements today to optimize the value of their respective telecommunications networks. Williams Communications President and Chief Executive Officer, Howard E. Janzen, and WinStar Chairman and Chief Executive Officer, William J. Rouhana, Jr., announced the agreements at a WinStar meeting for analysts and investors in New York City.
(http://www.winstar.com/indexNews.htm)
Also in October 21, 1998, WinStar announced a five year $2 billion contract with Lucent to design and build their new network.(see my post on Yahoo messages.yahoo.com@m2.yahoo.com)
According to AFC as disclosed in their 10Q, WinStar is another large customer that represents over 11% of their business.
(http://sec.yahoo.com/e/l/a/afci.html)
From AFC 10Q: "...For the quarter ended September 30, 1998, Winstar Equipment Corporation accounted for 11.4% of total revenues..."
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The rumor from the YAHOO board is that AFC was selected as a "best-of-breed" vendor and will continue to supply WinStar (through Lucent) their product...perhaps through 1999 with a contract valued as high a $27 million. Also rumored is that Lucent (and DSC) is presently designing a similar DLC product called "anycall" (or AnyMedia), but the new upgrade will NOT be available for another year or so.
Once completed Lucent may then be considered the vendor of choice to replace the AFC hardware with their new product for years 2-5 of the WinStar 5 year $2 billion network contract.
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What this signals is that competition is fierce and Lucent is positioning their services and products into space previously held firm by AFC. IMO, The WinStar deal was inked as a result of the financing arrangements that LU and their banks could offer over AFC.
Short term this should be positive for AFC. Lucent now becomes a major merger partner for AFC long term if they fail with their new product development or AFC can again "leap frog" the industry with a new model upgrade.
EKS |
