Rob, 36170 is 4 years old technology, like personal computer is 10 yeas old technology. How different is personal computer of 1998 from that introduced in late 80's.36170was designed in such way that you can add required features without exchanging hardware.36170 hardware cast ca.50-70k were fully loaded several milions.Below you will find what CEO of NN was talking about his products(36170 runs in NN ATM platform!)base on numbers(CEO of ASND admitted that NN was 4 years before ASND ATM and did not say that ASND switches are better.He stated that ASND products meet requirements of future networks) not just vague statment.Only NN can offer multiservices on unify platform:
" NN management platform is sophisticated: scales to 5,000
nodes. Closest competitor has 50 - 100. Ours is 100X anyone else's "
You add to "4years old technology ADLS features and you have density 3-4X higher then ASND state-of-the-art.
"Interesting technologies: ADSL, SDSL are far better than competitors. Beat them by 4 to 1 in density and
number of ports . . . better power, better control. Not just piggy-backed. MainStreetX is integrated. It can be
segmented. Split up bandwidth, apportion it to different uses."
During previous CC ANSD CEO comment about 36190(1Terabit) switch was that was delayed and he did not see it(thay must have very poor idea about NN!?).Last quarter 36190 has been shipped to european customers!
I have never heard him commenting about NN products with the support of real data(opposite to CEO of NN),always vuage statments!
To: j g cordes (4790 )
From: pat mudge
Tuesday, Jun 2 1998 9:49PM ET
Reply # of 5549
Conference Call notes, June 2, 1998:
[Refer to press release for numbers.]
Book to bill is over 1, with record backlog. Revenues in Q4 were 54% in North, South, and Latin America;
31% in Europe, Africa and Middle East; and 15% in Asia.
Head count 6,336, an increase of 83 for the Q. Tax rate 29.5%, consistent with Q3.
Cash $1/2 billion.
Inventory reduction in Q3 was $13M.
NN is a different company now. CSI initiative: using standards-based technology for private IP network for
managed IP services. Refocused after acquisition of UB Net --- now focus is on CSI services and on Layer-3
switching. Excellent oportunities in both. The 3Com Alliance is significant, as is Siemens.
Areas not as visible: looking at a $2 billion year coming up. Organizational changes. Entering new phase.
Addition of Alan Lutz [reiterated background given in press release.]
Terry Matthews:
I'm generally pleased with the quarter. We're positioned well for the new year. TDM increased as expected. It
still presents opportunities --- 80% is outside North America. Significant opportunities in infrastructure,
including for packet networks.
ATM market is "hot." For carrier and enterprise. NN management platform is sophisticated: scales to 5,000
nodes. Closest competitor has 50 - 100. Ours is 100X anyone else's.
The 36170 broke records for the quarter and year. Tenth consecutive quarter of growth --- 3 X higher this year.
[Referring to difficult year just past:] Issues were dealt with effectively. That is behind us. I apologize for first
nine months. Quarter 4 was turning point. We've made significant progress. We met challenges.
R&D committment: strong new products. Multi-platform ADSL, LMDS, IP Voice (Vienna), WDM (Cambrian),
Bridgewater, ACC Tigres, TimeStep. . .
Senior management appointments: Sommerer will head up Internetworking group and manage affiliates.
Alan Lutz --- value of stability in senior management.
There is tremendous opportunity in the industry. NN is ready. New technologies are opening up exciting new
opportunities.
Q & A
Q:
Sprint announcement underscores the evolution from circuit to packet. Will NN have a role? How will they
participate? Who are competitors?
A:
Much talk of using IP for voice and data traffic. [This annc.] represents trials for these products. All other
companies have IP and ATM. There are significant challenges. QoS, security, multiple pods (?), not all are
assured. A deterministic method is needed for media. Packet has significant growth. "Internet carries anything"
is not here yet. ASND, BAY, CSCO, all are competitors. Service providers who say they're going all Internet
are using a marketing ploy.
NN's advantages: our products manage 5000 nodes in a single domain, offer classes of service, handle
different types of traffic, have Virtual Private Network. [Wins with] BT, C&W, AT&T all have to do with
quality of Service. Large companies want service level agreement. Will a bank in London send $1Billion to NY
with no guarantee? Those who speak of "best effort" are just dreaming. Businesses want redundancy, class of
service, quality of service, managed. The over-all management available [by competitors] is appalling. Router
management is appalling.
Q:
Within the ATM segment of the market, there's a perception NN doesn't have IP. That others are catching up.
Who is passing you by? What is the future? What's happening with ATM wins?
A:
First of all, I want to say I didn't prompt you. I didn't set you up to ask those questions. [laughter]
Newbridge founded the movement to ATM. . . it handles all kinds of traffic. . . By design this technology can
handle all types of traffic. BY DESIGN. We took the high ground and said management is critical. [100X more
powerful than competitors.]
Scale is important. It's [good to note] all competitors are copying. All have adopted the same format. The 36170
has a successful string of wins. Last week we released the 3.1 which increases characteristics and capabilities.
1.6 up to 12.8 gigabits. ASIC to 50 gigabits at end of year. The 50 gigs uses the same software as the 1.6 and
12.8. Same inter-shelf (?) cables. This is good for clients. No loss. For example, you can upgrade from 1.6 to
12.8 to 50 with no hits. You don't lose one cell! Managed by network service platform. This summer
we'll have a low-priced version. 50% lower. Competitors go for time to market. They fail to mention features
like architecture and protection switching.
ATM wins continue to progress. DAX, ATM to replace FR; ATM to replace private lines: step by step
replacement in an over-all plan.
Interesting technologies: ADSL, SDSL are far better than competitors. Beat them by 4 to 1 in density and
number of ports . . . better power, better control. Not just piggy-backed. MainStreetX is integrated. It can be
segmented. Split up bandwidth, apportion it to different uses. Solution set is a broad range. CPE solution is
"world class."
Q:
What about large carrier delays from last Q?
A:
In the first 4 weeks, we've seen continued strength in order intake. TDM front, good recovery. Still plagued by
a few political issues. Latin America has turned around. Asia, not as much.
Q:
Can you comment on the MCI, BT, and C&W shipments? Were they material in Q4?
A:
Good Q4 will all. Long list of wins: PacBell, British Gas. . . some large opportunities. Quangdong . . largest
province in China. . . all producing. We see growth. Companies want to work with NN for multi-services.
CSI includes IP services with QoS. There's "unbelievable interest."
As for consolidation of carriers --- this is good for NN. Tenders under way. . . Global One, etc. We're in good
shape here.
CSCO, LU, Nortel are strong competition. But we are prepared.
Q:
If Nortel and Lucent buy into network companies, what would NN do?
A:
No one else has IP plus class of services, management. . . billing, trouble ticketing, changes of service. Have
to build in up front. [With these services] a service provider could target finance, hospitals, banks, and so on.
Competition is mainly a problem for Cisco.
Q:
Pricing of LU switches?
A:
Traditional router offers "best efforts." Best class will be ATM. You'll see forward pricing on OC-48. The 50
Gigabit switch --- will likely have ASIC finished this year. High-speed interfaces included. Carrier Class
forwarding engines. Routing tables --- significant that they're managed.
Q:
RFPs out of Europe? Compensation for senior managers?
A:
All senior people are extremely heavily weighted to growth and performance. Heavily weighted in options.
European service providers: there's deregulation. They all want equity. We offer IP networking with classes of
services so they can distinguish themselves. All IP and VoIP play up voice networking as cheaper. But heart of
networks is ATM --- to fill pipes at the right place.
Q:
Levels of RFPs versus last year?
A: [Lutz]
Competitive thrust is the same. "Speed kills" --- focus on execution. NN has wonderful portfolio of
technology. I came because of the 1800 engineers and scientists focused here. We need to execute on next two
quarters. Dedicated focus on improved execution. Activity in ATM levels: "It is literally everywhere. . . more
and more opportunities. . . this doesn't mean IP is lessening. It means [strength in] differentiation of services.
Network crashes are related to poor management systems. Announcements of NN win included global services.
Better management. [Reference was to CSCO and AT&T.] The infrastructure cannot be ignored.
Q:
Comment on linearities of Q and targets going forward. DSOs?
A:
Q4 improvement in linearity. [This was Greek. . . so I skipped most.] Linearity: 3 to 1 DSOs into 60-day
range. DSOs in Q were 99.
Q:
C&W --- was it old TDM or ATM?
A:
Mainly ATM.
Q:
Will AT&T contribute?
A:
Fairly soon. Yes, in Q1!
Q:
ATM with MPLS vs MPOA?
A:
All mfg. Will include MPLS. It's layer-2 on router --- makes it more deterministic. CSI is routing architecture
with ATM. Router vendors hope MPLS will give them strength. Hoping Class of Service is RSVP. Both are a
ways off. MPLS is for non-business applications. MPOA targetted at businesses.
Q:
MCI, BT, C&W --- can we seem them ramp significantly? Say, next fiscal year, will they contribute
substantially to year?
A:
We consider our wins breaking in. Opportunities are significant if we win ADSL and SDSL. Analyst
projections for RAS, ADSL, LMDS --- the thing about NN, more important than wins is opportunity to access
other business. AND add WDM --- absolutely compatible! I look at that [ATM] as just openers.
Q:
Could you give CSI guidelines regarding revenues: Did you say $2B in '99?
A:
Analyst considers it close to $2billion. Backlog equals 8 to 10 weeks.
This CSI thing. . . initial trials with key target clients. Every increase in number {can't read my own writing]. .
. trialing new architectures.
[There is] pent up demand for IP with managed networks. Many tell me, "I want IP but I will not use Internet
as it stands."
Q:
Revs in FY99 from CSI?
A:
Absolutely!
Q:
Relationship with Siemens?
A:
Domestically, we partner. 36190 is theirs. In labs. Has been used in Europe. Part of solution set. Europe is
strong. Jointly developing products. Have supplied to some key clients already.
Q:
TDM growth?
A:
Q4 was "pretty good." Q1 looks good, too. Many new applications for TDM product line.
Q:
Expect TDM trend to continue?
A:
Strong rebound. It is a multi-service play. So masks TDM as flat or down. X25 networks activity includes
3600 TDM. $8billion in installed TDM. Rare [a market like that] declines more than 15% per year. It was
cautious guidance last quarter. [Just came off warning annc.] X25 --- NN is only company with modern TDM.
Lots of activity for new X25 equipment. Only fully-working from X25 to Frame Relay to ATM. No other
vendor has this. No other vendor has management.
Active in a lot of tenders. "Tremendous activity in significant tendering activity." Last year $200 m in X25. [I
think he said in NA.]
Q:
How much is Siemens as percentage of sales?
A:
16% for full year.
Q:
New markets?
A:
Significant opportunities in ADSL, SDSL. Significant upsdie. In trial now.
Two other new products: 36140 and 36144.
ASIC set at end of FY. Same software as 12.8.
RAS: ACC 36100 --- Tigris: NEBS - compliant, exceeds competitors, VoIP (won Qwest), and "some we can't
announce."
Voice networking over IP, integrated into RAS platform, together with RAS function. Virtual ports vs. Fixed
ports. DWD --- multiplexing --- part of ATM play. 12.8 to 50 Gigs into Central POP, then into city.
Gain improvements through architecture. WDM at Interop "very successful." VoIP, VoATM coming quickly.
VoFR in trials.
CSI is vital for future: Class of Services, managed environment, second to none.
Emphasized COMS. "Will take it straight to desktop." Long list of technologies. Some in trial. Some coming to
market."
[That's all for now. Will finish when I return later tonight.]
As for doing cartwheels, I never could do them --- blamed it on being too tall. :))
Now, of course, I do them in the market.
Later --
Pat
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