To: Jorj X Mckie who wrote (2646 ) 3/12/2002 1:14:09 AM From: John Pitera Read Replies (1) | Respond to Seymour thinks SONS is a smart buy for CSCO.....VoIP your favorite Jorjie!!!!thestreet.com new digital model that used Voice over Internet Protocol (VoIP) . The CEO said he wanted to set an example as he set Cisco on a path to define, then dominate the VoIP industry. capital expenditure collapse . With investments being cut sharply, spending on the kind of revolution VoIP represents is not -- to put it mildly -- very popular. Two questions arise: Why hasn't the VoIP market developed more rapidly? Could bringing Sonus under the Cisco tent materially speed up Cisco's assault on this market? investors, is there an arb play here ? And on the Cisco side, is this going to help get Cisco's price back up? archaic circuit-switched technology to transmitting telephony signals in packets over the Internet , VoIP brings tel tech into the 21st century. There's already a world of packet-switched telephony, of course; that's probably how your long-distance calls are handled. But until local outfits crawl completely out of the circuit-switched hole they've dug for themselves, we won't begin to enjoy the real benefits -- clean signals, reliability, economy -- of a truly digital, end-to-end packet-based network. Sonus' VoIP gateways are best of breed and part of the answer to that conversion. For six consecutive quarters, Sonus has been the leader of carrier-class voice-packet systems, on both number of ports and revenue measures. Sonus looks like a smart buy for Cisco; I suspect its equipment would sell even better from a much larger vendor, which could supply other pieces of the puzzle as well. And as Cisco folded Sonus VoIP technology into its product line, it would strengthen its own products. visibility is mediocre and revenue will likely decline further in fiscal 2002 . Sonus is also so small that at any foreseeable level of sales, its contribution to Cisco's $4.5 billion quarterly revenue would be invisible. $5 to $6 a share. That means a Sonus buy could come in at less than $1billion -- not exactly chicken feed, but not much of a hit for a company with $20 billion-plus in the bank. A buyer also gets a dowry of whatever's left of the $125 million Sonus had in the bank at year-end.
