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Technology Stocks : Corvis Corporation (CORV) -- Ignore unavailable to you. Want to Upgrade?

To: Jeff Jordan who wrote (847)	5/11/2001 8:14:07 AM
From: Robert T. Quasius	Respond to of 2772

Article from www.lightreading.com finance site: Parmelee's Patient With Corvis -------------------------------------------------------------------------------- Credit Suisse First Boston analyst James Parmelee stills sees Corvis Corp. (Nasdaq: CORV - message board) as a long-term buy, despite some recent disappointments in its quarterly earnings call. In a report issued on April 27, Parmelee reports that Corvis's first-quarter 2001 results of $84.1 million came in substantially above his expectations. But although Parmelee still views Corvis’s long-haul transport and optical switching technology as “best-in-class,” his report echoes some notable concerns. The most meaningful development from the first quarter was progress with Qwest Communications International Corp. (NYSE: Q - message board). In addition to CorWave LR products, the carrier will now deploy CorWave all-optical transport and switching products to create an “express” network layer for heavily trafficked routes in its fiber optic backbone. Parmelee estimates that this deal could generate an additional $100 million in revenues beginning later this year, and also points out that the two companies have partnered to develop an OC768 (40 Gbit/s) transport system based on advances in Raman amplification and Soliton transmission. As Parmelee explains, the combination of Raman and Soliton is more effective for managing dispersion -- a critical issue for lengthening network spans -- than erbium-based alternatives. First-quarter revenues included $66 million from commercial deployment of all-optical switching and core long-haul equipment to Broadwing Communications (NYSE: BRW - message board), which is running live traffic. Corvis also booked $18 million in sales from a successfully completed trial with Williams Communications Group (NYSE: WCG - message board) and indicated it is undergoing a major lab trial for the CorWave XF in Europe. On the negative side, a lack of new customers, gross margin pressure, and an uncertain near-term sales outlook were viewed as potential red flags. The author attributed these concerns to increased pricing pressure from Cisco Systems Inc. (Nasdaq: CSCO - message board) and Nortel Networks Corp. (NYSE/Toronto: NT - message board), as well as variability in the second-quarter sales outlook with Williams. Beyond the near-term uncertainties, the author believes that new product initiatives, such as next-gen amplification designs based on Raman and Soliton, highlight Corvis’s technological prowess. The CorWave XL terrestrial and CorWave XF undersea festoon transport platforms can each span up to 350 kilometers without regeneration, targeting remote or undersea applications. Parmelee expects both of these new products to contribute to revenue in the second half of the year. Corvis also announced the CorWave LR transport system, which boasts up to 3.2 Tbit/s and 320 channels at OC192 (10 Gbit/s) over 80km or 160 channels at OC192 to 2,000km. In Parmelee’s view, these systems are ideally suited for regional networks in Europe where high-capacity systems cover shorter distances than in North America. Additional R&D efforts include an OEO (optical-electrical-optical) grooming switch (see doclink ), which the company intends to use as an alternative to its all-optical switch. This product will be integrated into the CorWave platform to groom lower-speed traffic onto the all-optical switch. An alpha version of this new product is expected by the end of the year. “We view the stock as attractive for long-term investors at these levels," writes Parmelee, "recognizing that the stock is in a trading range pending new customer announcements." — Christopher P. Bulkey, special to Light Reading lightreading.com