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Technology Stocks : Newbridge Networks -- Ignore unavailable to you. Want to Upgrade?

To: jeff greene who wrote (12145)	7/7/1999 10:55:00 PM
From: zbyslaw owczarczyk	Read Replies (1) \| Respond to of 18016

Barbarians At The Gate zdnet.com By Joe McGarvey July 5, 1999 12:00 PM ET In the lucrative land of data networking, Cisco Systems, with double-digit annual growth and revenue surpassing $8 billion in 1998, reigns as the undisputed king. But there's mounting evidence that all may not be well in the upper reaches of the kingdom. Unprecedented challenges from upstarts in the router market, coupled with an uncharacteristic move by Cisco to pull the plug on a next-generation switch, suggest that the crown may indeed be resting a little uneasily on the sweet spot of Cisco's product line - high-end data networking equipment for the core of the public network. While no one is suggesting Cisco's empire faces significant or immediate peril, analysts say that the sun could be setting on the company's days of dominance in the high-end routing and switching arena. "I do not expect Cisco to go out of business tomorrow," says Joe Skorupa, an analyst at Ryan Hankin Kent, which tracks the network equipment market. "However, the company is under pressure that it hasn't experienced in a long time." Most of the pressure on the router front is coming from a gaggle of start-ups on the verge of shipping products that will move packets of data based on Internet Protocol (IP) at rates far exceeding the abilities of Cisco's most powerful router. Even an expected upgrade to Cisco's 2-year-old GSR 12000, which quadruples the performance of its predecessor, falls many times short of the proposed speed and capacity of products in the works from Avici Systems, NetCore Systems, Pluris and Nexabit Networks, acquired late last month by network equipment kingpin Lucent Technologies. And while this quartet of next-generation wannabes poses only a potential threat to Cisco's high-end networking crown, a more immediate challenge is being waged by Juniper Networks, which has been shipping gear competitive with the GSR 12000 and taking business away from Cisco since September 1998 and which turned in a wildly successful initial public offering (IPO) in late June. "Juniper is taking a lot more market share than Cisco expected," Skorupa says, adding that Juniper's M40 Backbone Router is deployed in the core of several major carriers, including Cable & Wireless and UUnet Technologies, one of the world's largest Internet service providers. "The word from several service providers is that Juniper's product is easier to install and operate." Frontal assaults Part of Cisco's dilemma is its push to dominate the entire networking landscape. Cisco has spent much of the past few years broadening its product portfolio to do battle with established telecom equipment suppliers Lucent and Nortel Networks. As a result of those efforts, Cisco is now diversified enough to survive a minor turf invasion at the high-end of the data networking market. But industry observers say that maintaining control of the core of the public network is crucial to Cisco's long-term goals. "This is the core of what Cisco calls the New World network," says David Passmore, president of market research firm NetReference. "This space is strategic to Cisco. It is not willing to give it up." Besides the strategic setback, Cisco could miss a big financial payoff if its rivals loosen its grip on the core of carrier networks. Although it is currently valued at only about $170 million, the core switching and routing market could swell to more than $5.5 billion by 2003, according to Ryan Hankin Kent. The sizable surge in revenue is based on the tightly intertwined relationship between sales of backbone routers and the runaway growth of the Internet, which is doubling in size every six months, according to even the most conservative estimates. As traffic expands across the backbone, service providers must constantly replace equipment deployed at the core with bigger and faster gear. While this situation is good news for equipment makers, service providers are looking for relief from frequent and costly forklift upgrades. Even if they are able to redeploy high-end routers and switches at the network edge, service providers are forced to replace network gear long before it can collect dust - or a return on investment. To break this perpetual upgrade cycle, carriers are looking for high-end gear that can accommodate growth spurts beyond 18 months to two years, Skorupa says. Designed from the ground up for deployment in carrier networks, routers from Avici, NetCore, Nexabit and Pluris are fortified with expandable switching fabrics that enable service providers to increase bandwidth capacity simply by adding another module to the existing router. The Pluris Terabit Network Router, for example, can expand from a capacity of 90 gigabits per second to more than 180 terabits per second, says Sam Halabi, vice president of marketing at Pluris. In contrast, Cisco's GSR 12000 is a stand-alone device that has a maximum switching capacity of 60 Gbps. And with the 2-year-old product able to provide only 11 OC-48 (2.5-Gbps) connections, the accelerated growth of data traffic has already relegated the GSR 12000 to the role of an edge device, Cisco's rivals say. That's a categorization that Tony Bates, director of marketing for the optical internetworking business at Cisco, firmly rejects. "Just because the Internet is doubling every six months doesn't mean you need a new box with a higher magnitude of performance every six months," he says. "This is not about building terabit boxes. This is about building terabit networks." According to Bates, the key to accommodating Internet growth is to deliver technology that lets service providers distribute capacity across the network. Leveraging Cisco's Internetwork Operating System as a mechanism for harnessing the collective capacity of Cisco's routers, service providers can build terabit-scale networks with gigabit-size building blocks, Bates says. "The thing is the scope of those networks," he adds. Although Bates says Cisco will continue to expand the capabilities of its core router, it will do so at a pace that meets the demands of its customer base. In his estimation, the GSR product line will continue to fit the bill for the foreseeable future. But Cisco's competitors see things differently. Endorsing the formula of constructing terabit networks with terabit-size boxes, Nortel has a 20 percent stake in Avici, although a reseller agreement between the two was terminated late last month to give Avici some freedom to pursue a possible IPO. Lucent made its move into the terabit market in late June, with its announced purchase of Nexabit. Even the European players think there might be some substance to this terabit router thing. Siemens purchased Argon Networks, a high-end router start-up, in March to be part of its new Unisphere Solutions operation. Cisco's vulnerabilities aren't limited to the terabit router market. In the Asynchronous Transfer Mode space, which is expected to be another source of equipment for builders of next-generation networks, Cisco has shown some signs of sputtering. Suffering a major public relations setback earlier this year, Cisco pulled the plug on its high-end ATM product, the core switch it unveiled amid much fanfare a year earlier. Several industry observers blame the misstep on Cisco's internal development team. "It's no secret that the integration of StrataCom has been a miserable failure," says a network architect of a major carrier who asked not to be identified, referring to Cisco's $4 billion purchase of the ATM and frame relay equipment maker in 1996. The setback could further erode Cisco's market share in the ATM backbone arena. According to market figures from Dataquest, Cisco saw its share of the ATM backbone market decline slightly last year, as Ascend Communications - now part of Lucent - jumped to the front of the pack. What's going on Market watchers are floating a few theories as possible explanations for Cisco's apparent problems at the high end of the router and switch market. The one that holds the least stock with industry experts is that Cisco is a victim of its own success. Similar to Microsoft and other companies with double-digit growth rates, Cisco has suffered its share of brain drain. Software engineer Tony Li, who played a critical role in the development of Cisco's routing technology, was perhaps the most respected technical mind to depart for greener pastures. While at Cisco, Li earned the loyalty of several service providers with his extensive knowledge of complex routing algorithms and his ability to quickly solve problems that cropped up in Cisco's gear. Li left Cisco for Juniper a few years ago, where he contributed significantly to Juniper's well-regarded routing software. He recently left Juniper to pursue new interests. A second theory about Cisco's apparent vulnerability is that the recent and sudden diversity of Cisco's product line could be pulling attention away from the company's core competency. "They are waging battles on multiple fronts," Ryan Hankin Kent's Skorupa says. "Cisco is simultaneously engaged in battles where it is the biggest competitor - the IP core router market - and in markets where it is not the leader." Skorupa is referring to Cisco's epic struggle to compete in the full-service business with telecommunications equipment giants Lucent and Nortel and European powerhouses, such as Alcatel, Ericsson and Siemens. By trying to make up ground in the voice, telephony, cable modem, Digital Subscriber Line modem and call-center markets simultaneously, Cisco could be falling a step or two behind in the router segment. But then again, Cisco is Cisco, a Silicon Valley bully famous for locking corporate customers into proprietary strangleholds. A point of tremendous frustration for rivals - many of which no longer exist - it was not uncommon for Cisco-based customers in the enterprise market to purchase Cisco hardware that was 10 times the cost and six months behind competitive products. But customer loyalty will not stretch as far in the highly competitive and technically sophisticated service provider market, Cisco's newest set of rivals say. "The carrier space is definitely different," says Pete Chadwick, vice president of marketing at Avici. "It remains to be seen if Cisco understands the carrier market when its strength comes from the enterprise." Several analysts believe that Cisco is not concerned with pushing the envelope beyond its current high-end products because of the impending collision between electronic equipment, such as routers and switches, and optical networking gear. Cisco is already well-protected should the core of the public network go all optical, says Tom Nolle, president of research firm Cimi. The company recently took a stake in Monterey Networks, which makes optical equipment designed to switch wavelengths of data across long-haul networks. In the end, however, Cisco's best defense against losing the high end of the router market is its deep pockets and willingness to dig into them from time to time. "Cisco always reserves the right to buy someone," consultant Passmore says. "They can always whip out the old checkbook." zdnet.com

To: jeff greene who wrote (12145)	7/8/1999 11:11:00 AM
From: pat mudge	Respond to of 18016

Someone just sent me this, mentioning a NN start-up: eetimes.com

To: jeff greene who wrote (12145)	7/9/1999 9:44:00 PM
From: pat mudge	Read Replies (1) \| Respond to of 18016

Wireless and miscellaneous links put together over the last couple days: multexinvestor.com I took the liberty of finding the two articles the author mentions, primarily b/c they're older than 30 days and not available on WSJ's standard search engine. <<<< Companies Are Placing Big Bets on ` Fixed Wireless ' By Leslie Cauley and Nicole Harris 06/08/1999 The Asian Wall Street Journal It's called " fixed wireless ," and it has fast become a fixation for many big communications companies. In recent weeks companies including MCI WorldCom Inc., Sprint Corp. and the Liberty Media unit of AT&T Corp. have spent billions of dollars to establish beachheads in this "broadband" technology. The service is attracting attention because it allows companies angling to sell interactive video, Internet connections and phone services to reach potential customers directly -- rather than having to pay tolls to go through the regional phone companies, or to build their own expensive wired networks. As the name implies, fixed wireless is a stationary wireless service. Networks typically include a series of "base stations" armed with wireless antennas that are connected to other gear. Customers usually need a rooftop antenna. The services offered, which can include high-speed Internet access and traditional local phone service, are often offered at deep discounts from the rates charged by traditional providers. Nobody is making any money on this yet -- in fact, most purveyors of the technology are bleeding a lot of red ink. But some of the country's savviest high-tech investors see great potential. Sprint, one of the more bullish spenders, recently announced $1 billion of deals to gobble up People's Choice TV Corp., American Telecasting Inc. and Videotron USA, a subsidiary of Canadian cable giant Le Groupe Videotron Ltd. Meanwhile, MCI WorldCom is paying $350 million to buy CAI Wireless Inc., based in Albany, New York, and recently announced plans to buy two more wireless companies for a total fixed - wireless investment of about $1 billion. These acquisition targets all provide wireless cable services, which are considered part of the fixed - wireless family. Another new convert is cable magnate John Malone, chairman of Liberty Media Group. Last week, Liberty announced plans to buy Associated Group Inc., the largest shareholder of fixed - wireless company Teligent Inc. The all-stock deal was valued at around $2.8 billion, plus the assumption of $187 million in debt. The transaction would give Liberty a 41% stake in Teligent, considered a highflier in the fixed - wireless world, and a seat on the company's board. Teligent, based in Vienna, Virginia, provides businesses with high-capacity telephone and Internet services via rooftop antennas in more than two dozen markets across the U.S. Given Liberty's reputation for making smart technology bets, the deal caught the attention of Wall Street. Investors sent Teligent shares soaring by more than $5 on the day the Associated agreement was announced. Liberty said the move was a slam-dunk, considering the growing needs of the broadband audience and a demanding customer base that needs to move information quickly and seamlessly. "As we continue to move into broadband networks, there will be more information flowing and a greater need to move information quickly," said Gary Howard, Liberty's chief operating officer. Fixed - wireless carriers such as Teligent use "point-to-multipoint" technology that relies on a central antenna to send signals to customers' rooftop antennas, and also receive traffic back from these antennas. The system uses high-frequency signals, and requires a clear line of sight between the antennas. Since fixed - wireless companies don't have to lease parts of their networks from the regional phone companies, their operating costs tend to be relatively low. It also is faster to set up the antennas than to construct a wireline network over the "last mile" to customers' offices and homes, which requires digging up streets and yards and manually laying lines. "What we're seeing is companies trying to get to the last mile by any means necessary," said James H. Henry, an analyst at Bear, Stearns & Co. "They need the critical on-and-off ramp to the information highway that they're offering through broadband services." For these and other reasons, many analysts believe wireless broadband, or high-capacity, systems will grow quickly. Larry Swasey, a senior analyst at Allied Business Intelligence, thinks the number of wireless broadband users will jump to over three million by 2004, more than 15 times the 200,000 users that are expected by the end of this year. "This is just the beginning," he says. Still, the technology isn't flawless. Some early fixed - wireless systems proved temperamental. Rainy weather faded the service, and the line-of-sight technology was difficult to install in dense areas. But analysts agree that most of these issues have been solved through technological advancements, and better planning and construction of systems. "Over time, these companies have demonstrated that the system works," says Ken Hoexter, an analyst with Goldman, Sachs & Co. While big players such as Mr. Malone's Liberty capture headlines with wireless purchases, smaller carriers are quietly pushing for their piece of the action, too. Qwest Communications International Inc., a tiny telecommunications company with big ambitions, agreed earlier this week to invest $90 million for a 19% stake in Advanced Radio Telecom Corp. And a raft of other buyers are sniffing around for deals. The wireless race, by all indications, is just getting started, adds Mr. Hoexter. "Since the market dynamics are changing so quickly, if you blink you might miss the boat. >>>>> >>>>> Broadband Offers Promise , Volatility 04/21/1999 Dow Jones News Service By Carolyn Whelan NEW YORK (Dow Jones)--The push toward broadband Internet access was a driving force in the recent deal between Excite and @Home, which provides high-speed Web connections (see Weekday Trader, "Excite Deal Shows Cable Modem Is King," January 19). But as cable modems and the telephone companies' Digital Subscriber Line (DSL) technologies vie for consumers' dollars, a much more powerful technology is emerging with great potential for the lucrative small to medium-sized businesses market: wireless broadband. Wireless broadband is a microwave-based technology that allows quick and cheap broadband Web access via portable radio towers. Yet this promising technology has been held back by its high set-up costs and capital-intensive nature, which has deterred many an investor. But recent moves by powerhouses Cisco Systems, Lucent Technologies, Northern Telecom, Sprint and MCI/Worldcom have pushed the technology into the fast lane. Over the last few months, all those tech powerhouses have either bought or taken major stakes in smaller wireless broadband companies, or are in partnerships to offer such service. The advantages of broadband wireless - particularly a newer technology called point-to-multipoint - are that it has about 10 times the capacity of DSL, but with none of DSL's distance limitations, and it can be installed more quickly and economically. That makes it ideal for small- to medium-sized businesses with 15 to 500 lines that need high-speed access to the Internet, fast. Other possibilities? Hotels and conference sites that need temporary, low-cost broadband access. "They face tremendous opportunity ... [in] an underserved segment of the market," says John Hodulik, an analyst at PaineWebber. That's why new players are jumping in. "It's a pretty large sweet spot," explains Bo Fifer, an analyst at Alex. Brown. "The vast majority of commercial office buildings just don't have a broadband connection." The speed of the rollout is impressive. In six months Teligent launched service in more than 25 markets, an unheard-of rate for most wireline operators. Thus far, Teligent says it has over 1,000 separate organizations connected. And the market may be on the verge of exploding. The U.S. small business market for broadband access will grow by around 64% this year alone, to $478 million, from $290 million in 1998, according to Ray Boggs, an analyst at the International Data Corporation; it will continue to grow at a projected 37% annually until 2002, to $1.015 billion. (That's not even counting medium-sized businesses, which Boggs guesses could add another 15 percentage points to the growth rate.) And "the market for this equipment is as large internationally as it is domestically," adds Lior Bregman, a managing director at CIBC Oppenheimer. Besides the Lucents, Ciscos and Northern Telecoms, investors are looking at several "pure plays" on wireless broadband, the largest of which are Winstar Communications, Teligent (backed by Northern Telecom) and Nextlink Communications. "All of these companies are on the cusp of a period of remarkable growth," says Fifer. Riyad Said, a senior analyst at Friedman, Billings, Ramsey & Co., likes both Winstar (which he rates Strong Buy) and Teligent (which carries a Buy rating), because they have a national footprint and are well-funded by strong business partners. He's particularly bullish on Winstar, because Lucent is giving it vendor financing and other backing. Fifer likes Winstar, too, though he cautions the stock can be a rocky ride. "You have to be very careful about picking your entry point," he says. For less volatility he suggests Teligent. Hodulik also finds Teligent attractive. Ken Hoexter of Goldman Sachs has Nextlink as his top pick. He rates it Recommend (Strong Buy). Valuations of such early-stage, fast-growth companies are notoriously problematical. Because of their heavy capital spending, these companies won't report earnings for years; even EBITDA (earnings before interest, taxes, depreciation and amortization) is likely to be negative for some time. That's why some analysts use enterprise value (the company's stock market capitalization plus net debt) to revenues. By that measure, Winstar looks most reasonable, with an expected EV/sales of 5.3x next year and 3.5x in 2001, according to Hodulik. Nextlink's EV/Sales is projected at 10.9x next year and at 6.5x in 2001, while Teligent is the priciest of the three, with EV/Sales multiples of 19.5x and 8.1x, respectively. (It's also projected to be the fastest-growing by far: Revenues should accelerate by over 400% next year and by another 141% in 2001, Hodulik estimates.) The stocks are off their highs as well. At Tuesday's closing price of 41 3/4, Winstar is 18% off its 52-week high of 50 13/16, while at 47 Teligent is 27% off its 52-week high of 62 1/2. Meanwhile, Nextlink changes hands at 53 5/16, about 7% off its high. All these companies might eventually become takeover candidates as the big telecom players look to buy into this business, says Hodulik. There are risks in the sector, of course-high risks. Signing up and retaining customers is very costly. Still newer technologies could upstage these current cutting-edge providers. And these companies will bleed plenty of red ink in the short term, while earnings look like they're another millennium away. But that's par for the course, says Hodulik. "The losses are intrinsic to any business with these fixed costs," he explains. But he adds: "The magnitude of the opportunity far outweighs the potential risks." These volatile stocks aren't for the faint-hearted-or people who want to see actual earnings in the next year or two. "But, on a five- to ten-year horizon, you will find a lot of value here," insists Fifer. Investors usually aren't that patient these days, but those who are may decide to take this potentially profitable -but bumpy - ride. >>>>>>> And some more random finds,one or two I may have already posted. I've been told the one from SBC is more important than most realize. BT and LMDS: search.bt.com btwwide.com Bell Atlantic and LMDS: bellatlantic.com Bell Atlantic Network Integration: bani.com bellatlantic.com bellatlantic.com bellatlantic.com SBC and ATM: sbc.com Note availability dates: sbc.com sbc.com sbc.com SBC International sbc.com Now, off to the movies. . . Pat