The nice thing about frame relay is that it is actually here. ATM is not yet mainstream while frame relay is immediately available and winning enormous support riding on the huge demand in the market place for switched high speed data applications. Frame relay is an interface protocol that is designed to take advantage of improved transmission technology. It is designed to handle data, but already engineers are working on voice and video capabilities. FR is able to share infrastructure such as access points, backbone switching
equipment and transmission lines. It is well suited to LAN networking corporate intranets and IBM SNA migration. FR is cost effective and mostly requires only a software upgrade in customer equipment to implement. It seems bound to succeed because of its ability to produce the goods. ATM stands to benefit too.
FR is generally regarded as an effective springboard for this emerging
technology. FR owes it success to several critical factors in the market. Users devices become more intelligent and ubiquitous. Office workers have their PC's as well as access to servers, the internet and other LAN based resources.The result is an enormous growth in new applications that are bandwidth intensive and bursty in nature. Enter Frame Relay. When something comes along that addresses all these mportant requirements, is easy to apply and doesn't cost an arm and a leg, then it's not surprising if it proves a winner.
Frame Relay is enjoying the fastest growth of any communications technology in history with Forrester Research last year forecasting: "Through the year 2000 FR's services will zoom almost 1,000 per cent.Annual Growth has been consistently coming in at 700 hundred per cent with support by carriers and suppliers strong world-wide."
According to Vertical Systems networks in the US spent US1.3 billion last year on FR and there is no sign of that falling away. More effort needs to be made to improve access and pricing for FR connections to core networks and to ensure that connecting carriers meet advanced technology requirements. Carriers are now employing fibre optic with its increased improvement in bandwidth . China will become a very important Asian market . China is installing 17 million telephone lines a year. Internet subscribers are also growing about 40 per cent a quarter. Telephone networks are now being tested with the increase
in the average length of calls as Internet users hog the telephone lines from an average of 4 minutes to about an average of 20 minutes.Cascade is providing the equipment to the carriers to meet the increasing traffic. Reducing the congestion and inevitable overload (blackouts) in the core of a backbone network.
Ascend CEO and president Mony Ejabet admitted in an interview in Hong Kong last week that Ascend does not yet have a 56Kbit product.He has doubts about the reality of its benefits.They are going to do it, produce a 56Kbit product because there has been lots of marketing hype. " You,ve got to meet to the hype because customers want it. This is not always going to work at 56Kbit. For
that technology to work all the carriers..." telephone companies have to have the bandwidth lines available. If telephone carriers could introduce a time usage charge for using the internet this would free up the much needed bandwidth. I know of cases where customers with telephone copper lines are only get 14.4 out of a 28.8 modem. Of course I don,t want this to happen. Cascade has the largest market of the frame relay market. ATM could replace Frame Relay as the mainstream standard. Just as fibre optic was suppose to replace the copper wire lines. But that is going to take a long time to happen.
Again ATM was suppose to replace fast ethernet but now
you have gigabit ethernet and all these things take time to implement.
Cascade has the largest market share in FR and I would only dump the stock if management dropped the football and lost market share from another competitor; from say running in first to falling back to third place. Second place I could live with but I would expect Cascade to fight it out, otherwise I would be buying stock in the other company.
J.P. Morgan analyst William Rabin said he reiterated ratings on several networking stocks.
-- reiterated "buy" ratings on Cisco Systems Inc (NASDAQ:CSCO),
Cascade Communications Corp (NASDAQ:CSCC), Cabletron Systems Inc
(NYSE:CS) and Newbridge Networks Corp (TSE:NNC). He also reiterated a "market performer" rating on 3Com Corp (NASDAQ:COMS). -- set a 12-month price target of $85 on Cisco; an $85 target on Cascade; a $50 target for Cabletron; a $42 target for
Newbridge Networks; and a $42 target for 3Com.
-- said the market for networking equipment offers "one of
the sustainably strongest, non-cyclical growth opportunities
available to investors today." -- said he expects 30 percent annual growth in the networking-equipment market through the end of the century, rising from $28 billion industrywide in 1996 to $72 billion in
2000.
-- expects a consolidation wave to spur market leaders to
acquire small startups and become stronger competitors. Rabin
says the changes will be such that only Cisco, the dominant
player, is likely to survive in its current state.
I've been tracking CSCC a long time waiting to get in and I'm loading
up as much stock as I can. My market timing is useless. It will probably go below $20. I have never been able to time my purchases to buy right at the bottom.
Check this web site out, they have done quite well and Cascade is in their portfolio.
fishnet.net. |
