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

To: Cooters who wrote (259)	6/8/2005 10:07:54 AM
From: Cooters	Respond to of 1575

Here's two clips from Smith Barney about Sonus specifically and the enormous opportunity just for IPTV in the US: IPTV: Interesting IPTV Takeaways From The Alcatel Group Meeting. Early in the morning we attended an Alcatel (ALA--$10.96, 2H by Robin Nazarzadeh) presentation hosted by Tim Krause, Senior VP of Strategic Planning. He spoke about IPTV and the carrier triple play. We found the following observations to be of note: • Despite any integration and service delivery challenges the ILEC may be having around IPTV services, the competitive challenge from the MSOs loom large and the ILECs have to move as quickly as possible. • By 2010 Alcatel expects there to be 72 million IPTV subscribers in the U.S. with the carriers having spent $28 billion in capex to support the services. This works out to about $390 per subscriber. • Of the total IPTV capex, Alcatel believes the rough breakout will be 20% for set-top boxes, 10% for video equipment, 10% for integration services, 30% for IP/Ethernet/Optical transport, and 30% for the broadband access build. • The downstream access bandwidth required for triple play services is 20Mbps broken down as follows: 16Mbps for 1 HDTV and 2 SDTV sets, 250k for a dedicated gaming channel, 220k for two voice lines with “vision”, and 3Mbps for high speed Internet. • A triple play network requires 10x the bandwidth of a double-play network (high speed Internet and voice only). Also about 1/10 of the subscribers can be assigned to each GigE port when IPTV is added to the service mix. Sonus: Sonus Very Upbeat On Its Position In VoIP And Opportunity In IMS: High Order Rates In 4Q And 1Q Look To Only Be The Tip Of The Iceberg We met with Sonus' (SONS--$4.39, 1S) CEO, Hassan Ahmed, and CFO, Ellen Richstone. Hassan repeatedly made the point that Sonus is being adopted by more customers, larger customers, in more countries, in more complex networks, and as more of a strategic partner. Sonus is one of the few networking companies to proactively adopt FASB 972, which prevents revenue recognition on orders until post shipment obligations are completed. As investors in the shares are aware, this is causing some rather long revenue conversion cycles on orders. High Bookings Levels In Last Two Quarters Look To Be The Result On Many Initial Customer Deployments Rather Than Few Large Deployments, Which Implies Good Visibility To Future Order Growth. Sonus explicitly stated its 1Q book-to-bill was "almost 2.0" and we believe it may have been even higher in 4Q. Typically, a Sonus customer begins with a rather small initial deployment before rolling out to a multiple city build. Hassan implied that good initial order strength from multiple new customers drove the high bookings levels in 4Q and 1Q and that visibility to order growth from these and other existing customers is solid. We believe this strongly implies that while there cold be some Q-Q ups and downs on the revenue line due to recognition issues, Sonus' sustainable level of revenues is meaningfully in excess of the numbers reported in the last couple of quarters. As We Previewed With Heavy Reading, Sonus Announces Its IMS Strategy. IMS (IP Multimedia Subsystems) is an evolving standard meant to address how a carrier can deliver any IP service over any IP network, and is being embraced by the industry as the most promising way to convergence service delivery on wireline and wireless networks. Media gateways and SIP (Session Initiation Protocol) are both key pieces of IMS and Sonus is a leader in terms of installed base of these technologies. With the introduction of the IMX multimedia application service platform today, Sonus is bridging the gap between the infrastructure and service layers in the IMS model and is now positioning itself as a full-fledged IMS vendor. We believe Sonus' existing penetration of both wireline and wireless carriers (ex. AT&T and Cingular) also positions the company well for success in its IMS strategy.