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To: TigerPaw who wrote (30528)	12/21/1999 9:18:00 AM
From: Zoltan!	Respond to of 77400

** Hambrecht & Quist ** December 20, 1999 - 1:27pm Company: Cisco Systems Recommendation: Buy Acquires Pirelli's Optical Systems Business - Becoming a Major Force in Optics Excerpts: ....We view this acquisition extremely positively, as it both rounds out Cisco's optical portfolio and provides it with a global customer base that is particularly strong in Europe.... We believe that Cisco, with its strong execution history, should be able to solve Pirelli's execution issues going forward. Pirelli's optical systems business had 1999 revenues of approximately $225 million, a growth of greater than 100% year-over-year, with DWDM accounting for approximately $180 million. We believe that Pirelli's optical systems business could grow 100% again next year, to approximately $500 million. Pirelli's optical systems product portfolio includes both long- haul and metro WDM systems. The long-haul systems include an 8-channel WDM system and a 32-channel DWDM system that is scalable to 128 channels. While the 128-chnnel count system is shipping we do not anticipate meaningful volume until the second half of 2000 when carriers become more comfortable with the product. Pirelli has a strong global customer base, its largest customer is Frontier, other customers include MCI/Worldcom, Global Crossing and Deutsche Telecom. Pirelli is also active in several "Greenfield" build outs, as well as with second tier carriers.... ....As a result, Cisco is able to offer carriers an entire end-to-end multi-service optical network. The products in the end-to- end portfolio include Pipelinks', a company Cisco acquired in December 1998, SONET access box, plugging into a Cerent add/drop multiplexer/optical cross- connect, and a Monterey optical cross-connect siting next to into a Pirelli DWDM system. We believe that this optical portfolio could generate approximately $1 billion in revenues in CY00 thereby putting Cisco in the top- tier of optical equipment vendors.... We believe that the acquisition of Pirelli is a strategic positive for Cisco. Besides rounding out its optical portfolio, Cisco also gets access to Pirelli's global customer base, which includes traditional carriers, "Greenfield" builds, and second-tier carriers. We believe that the addition of Pirelli to Cisco's optical portfolio make the company a top-tier vendor in the optical equipment market. .....