Clint,
CSCO got a downgrade today. I think it initially popped due to
the Sprint announcement. There has been so bad press on whether
Sprint can actually pull it off though. I also think there is the
fear that CSCO will buy something big and expensive as a result of
all the other mergers in the telcommunication industry.
Harry
***********************************
SCO: FIRST ALBANY CR decreased estimate for quarter ending
07/98 from $0.49 to $0.48 on 06/02/98
CSCO: GRUNTAL decreased estimate for long term EPS growth from
30.00% to 25.00% per year on 06/03/98
*************************
CSCO: GRUNTAL reconfirms the recommendation as Moderate Buy on
06/03/98
**************************
The tough part will be leasing the direct connections to customers from
local phone companies. Sprint executives Tuesday acknowledged that a
single line today might cost as much as $50 per month to lease. And the
Bells are notorious for dealing slowly with requests for line connections
from new entrants to their local markets.
Even so, Sprint is the first carrier to redefine phone service as most
customers now know it, said John Chambers, chief executive of the
Internet networking company Cisco Systems Inc. Speaking via videotape
at the Sprint press briefing, Mr. Chambers noted that "Those who
understand [the move toward streamlined networks] will be leaders," he
said. "Those who don't will be left behind."
In a major coup for a data-networking company, Cisco will act in the future as
the primary supplier and supervising vendor of the Sprint network, replacing
telecom leaders Northern Telecom Ltd. and Lucent Technologies Inc., Sprint
executives confirmed.
interactive2.wsj.com.
**********************************
This writer was unimpressed:
Analysts Sour On Sprint
Network Plans
(06/02/98; 8:24 p.m. ET)
By Mo Krochmal, TechWeb
Technology analysts are unsure whether
Sprint can pull off the ambitious network
plans it unveiled in New York Tuesday,
and some went so far as to accuse the
telecommunications company of
promoting services it may not be able to
offer.
Sprint rolled out its Integrated
On-Demand Network strategy, a plan
implemented in partnership with Cisco
and Bellcore to provide "virtually
unlimited bandwidth" over single
telephone lines. The strategy lets users sit
down at a communications buffet and
gobble up buckets of bits using data,
voice, and video over existing copper
lines.
The plan depends on Sprint being able to
buy capacity on the local data networks
that many of the regional Bell operating
companies (RBOCs) are planning to
build.
Calling it an "integrated on-demand
network," Sprint plans to sell it as
one-wire-does-it-all, using one network
connection for multiple phone lines,
access to the Internet, and advanced data
services. The offering will be made to
large businesses later this year, general
business clients later next year, and
residential consumers in late 1999.
The announcement was made at a
Broadway theater, with a cast of actors
acting out scenarios in a multimedia
presentation.
"This is smoke and mirrors, covering up a
bad earnings announcement," said David
Goodtree, director of telecom strategies
for Forrester Research, a Cambridge,
Mass., research company. "They were not
creditable. They threw in every
networking buzzword in a grand concept
of fuzziness. There is nothing there."
Goodtree said he could not see what
magic bullet Sprint had that other telcos
like AT&T, MCI, Bell Atlantic, Quest,
and Williams did not.
Those companies are critical for Sprint to
make its strategy work, said Abhi Chaki,
technology analyst for Jupiter
Communications, a New York-based
research company. Sprint can offer
services to large customers via the
broadband metropolitan networks,
bypassing local carriers, but to reach the
broad consumer and small office/ home
office market, the telcos are critical.
"Sprint will have to negotiate deals with
the RBOCs to reach small offices and
homes," said Chaki.
Chaki said he was impressed with Sprint's
technology, letting users dynamically
allocate bandwidth.
"But great technology doesn't win market
share," he said. "AT&T and MCI are not
going to roll over and die."
The winners in this deal, Chaki said, are
Cisco, which suddenly gets credibility in
the telecommunications market; Bellcore,
which finds an identity; and businesses,
which will gain bargaining power as other
telecommunications providers jump into
the marketplace.
Sprint is taking a tremendous risk, said
Elliot Becker of San Diego, a senior
telecommunications analyst with
BusinessTech.com.
"They are going to have to execute
agreements with the local exchange
carriers and then get customers to fork out
$200 for a meter so that they can be billed
on bits, rather than phone calls," he said.
"Getting large numbers of people to go for
a new technology, which often looks
appealing on paper, is a monumental task
in the real world." |
