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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (39754)	6/18/2003 10:44:00 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 71526

Telecom Gear Firms See Glimmer Of Hope Investor's Business Daily Wednesday June 18, 10:13 am ET By Mike Angell After a long drought, telecom gear makers are finally feeling a sprinkle of new orders. Make no mistake: Telecom networks will spend only about half of what they did during the industry's peak in 2000. And the latest surge of orders is still within the range of prior forecasts. But the prospect of any new spending is a welcome sign for the beleaguered industry. ADVERTISEMENT "The gear makers are excited by anything that generates a purchase order," said Lehman Bros. analyst Steve Levy. "Actually they are hyperventilating over it." So what are customers buying? Data networking equipment, for one. Telecom carriers are getting more gear for carrying data rather than voice. New regulations could promote more investment in the networks between the customer and the carrier. Even the U.S. government plans to get the latest in telecom gear for a new network. BellSouth Corp. announced in May it had completed building its data network, comprised of gear from Cisco Systems Inc. and Juniper Networks Inc. Mark Kaish, BellSouth's vice president of data services, says it's part of a gradual move toward a network that can carry everything from voice to data to video. "We just have to manage one network rather than four or five," Kaish said. And The Winner Is . . . SBC Communications Inc. said in January it was planning a data network that would cut across the various states it services. Cisco won the deal. Verizon Communications Inc. is also building a large data network. It has yet to announce the main contract winners. A Lehman report says AT &T Corp. is preparing a plan to add routers to its network. The deal could be worth as much as $150 million. In addition to buying technology to route data, the regional Bells need equipment to transmit the data. The fastest way to transport data is through fiber-optic telecom gear, which uses light instead of electricity to transmit voice and Web pages. BellSouth recently awarded Lucent Technologies Inc. and Cisco contracts to provide new fiber-optic transmission gear for its networks. The new gear will be installed only when a BellSouth customer decides to upgrade to services offered via such equipment. Over time, the new gear from Lucent and Cisco could be in all of BellSouth's 21,000 city and regional optical networks. With new data networks in place, the Bells hope to sign up more customers for high-speed broadband services, such as digital subscriber line access. Investment in this type of infrastructure "has largely been starved," said Albert Lin, an analyst with equity analysts American Technology Research. Verizon laid out big DSL plans in March when it said it planned to add 10 million DSL-ready lines to the 36 million it already has. The move to increase DSL availability is tied to moves in Washington, D.C. The Federal Communications Commission plans to issue new rules soon regarding what parts of telecom networks must be shared between large networks and new competitors. Levy says the FCC order will contain specific definitions of the types of broadband network equipment that may be shared with competitors. Those definitions will determine what types of gear telecom carriers decide to invest in. "There are small definitions that could be left open," Levy said. "We're working with just five pages of directions right now." France's Alcatel Alsthom SA has won the bulk of contracts for DSL network equipment. It's announced that Verizon chose Alcatel products for some of the carrier's DSL rollout. Other smaller companies such as Advanced Fibre Communications Inc. and Adtran Inc. may benefit from other rollouts if their products meet the definitions laid out by the FCC. Another upgrade for many telecom carriers is a move to put voice traffic onto data networks. That requires purchasing specialized computers capable of handling voice over Internet protocol, or VoIP. VoIP lets customers make cheaper long-distance calls and makes possible entirely new types of services. The regional Bells are all testing the technology, Levy says. Long-distance firms MCI and Sprint also announced plans to upgrade parts of their network to VoIP. Nortel Networks Corp. won those contracts. BellSouth is looking at the technology. Kaish says the vendor for that project should be selected in the next six months. Verizon is planning to issue a bid for VoIP technology. Large telecom gear makers such as Lucent and Nortel could benefit from that contract. Smaller companies like Sonus Networks could also be in the running. Four-Part Deal One of the biggest plans for new telecom gear comes from the Pentagon, which wants a global network for communicating to far-flung forces. The Defense Information Systems Agency looks to build a large, worldwide communications network that would combine fiber-optic communications and data routing products. The deal is valued at $800 million to $900 million. The project calls for different technologies, including data networking and fiber-optic transmission. The contract is being broken into four contracts - each worth around $200 million. Levy says the main names in the industry such as Lucent, Nortel, Cisco and Juniper are all likely bidding on the deal. [Harry: This is interesting CIEN, TELM and CORV not mentioned at all.]