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To: Jack Colton who wrote (5822)	7/31/1998 10:54:00 AM
From: pat mudge	Respond to of 18016

Jack --I guess it's the dog days of summer. I meant to post this last night and then got waylaid: Two earnings reports that indicate strong growth in telecommunications and networking products and then a FT article on the surge in spending by US telecoms. From Anicom's earnings' release: Net sales for the second quarter of 1998 increased to a record $113.3 million, a 116 percent increase from net sales of $52.5 million in the second quarter of 1997. Net sales for the six months ended June 30, 1998 rose by 121 percent to a record $215.4 million compared to net sales of $97.5 million reported for the first half of 1997. . . . On this morning's conference call, the Chairman of the Board, Anixter, Sr., said, "This market --- cable and wire distribution --- is so overwhelmingly huge, I defy anyone to put a figure on it." Keep in mind he sounds like a Southern Baptist preacher on speed --- talk about periphrastic hyperbole! Their attorneys must turn grey the minute he opens his mouth. And from ECI: newsalert.com ECI Telecom Announces Record Results For The Second Quarter Of 1998; Net Income up 36% on 21% Increase in Revenues Business Wire - July 30, 1998 09:01 Jump to first matched term PETAH TIKVA, Israel--(BUSINESS WIRE)--July 30, 1998--ECI TELECOM LTD. (NASDAQ/NM Symbol: ECILF), today announced consolidated unaudited results of operations for the second quarter and six months ended June 30, 1998. Revenues for the second quarter increased by 21% to $197,068,000 compared with $162,224,000 for the comparable period in 1997. Gross profits rose 36% from $82,694,000 to $112,728,000 in the second quarter of 1998. Operating income increased by 37% from $31,727,000 to $43,484,000. Net income for the second quarter of 1998 rose 36% to $41,026,000 or $0.53 per share ($0.52 fully diluted), compared to $30,185,000, or $0.40 per share ($0.39 fully diluted), in the corresponding period last year. Revenues for the six months ended June 30, 1998 increased by 18% to $381,209,000 compared with $322,283,000 for the comparable period in 1997. Gross profits rose 35% from $160,788,000 to $217,217,000 in the first half of 1998. Operating income increased by 34% from $63,131,000 to $84,539,000 for the first half of 1998. Net income for the six months rose 33% to $79,411,000 or $1.04 per share ($1.00 fully diluted), compared to $59,606,000 or $0.78 per share ($0.77 fully diluted) in 1997. At 23.9%, pretax margins for the second quarter were, once again, the highest recorded since 1994. Gross, operating, and net margins were all at, or near, records, reaching 57.2%, 22.1%, and 20.8% respectively in the quarter as compared to 51.0%, 19.6%, and 18.6% respectively in the second quarter of 1997. The improvement in gross margins is primarily attributable to the product mix and increased efficiencies in operations and cost reduction programs. During the second quarter, the DCME and Network Systems (formerly SDH) strategic business units (SBUs) recorded particularly strong growth, as did ECTEL. Commenting on the results, David Rubner, President and CEO of the Company said, "We are very pleased with our second quarter results which demonstrated strong top line growth and continuing high profitability. "The quarter was very productive from a marketing point of view. During the second quarter, we were awarded a number of important contracts for our integrated solutions based upon technology from several strategic business units, such as video over SDH and data networking solutions involving DCME. A good example is the SDH network we are installing in Singapore which will include our new video application. "DCME had a particularly strong quarter. We are experiencing broad based demand from global carriers for our DTX-360 and from cellular operators for our QuadCoder. "Our R&D effort continues strong, and during the quarter we demonstrated several important new products. At the CeBIT show in Hanover, Germany, we launched our Hi-FOCuS - ATM over ADSL broad band access system, while at the National Association of Broadcasters show, our Hi-TV transported High Definition TV and studio quality digital TV over domestic US and trans-Atlantic ATM network between MCI, IBM, Deutsche Telekom and British Telecom. We also demonstrated Hi-PNet - Voice over IP- at Supercomm '98 "This month we had a highly successful users' group meeting, where over 600 customers, from more than 65 countries, shared views on technology and market trends". Mr. Rubner concluded, "We continue to work aggressively on new products and important new marketing relationships and remain committed to enhancing shareholder value." Further to the Board of Directors' decision, an interim quarterly cash dividend of $0.05 per share, to be paid out of the second quarter profits, will be paid on or about August 28, 1998. The dividend, net of taxes to be withheld at source and in compliance with Israel's foreign currency law, will be paid to shareholders of record as of close of business on August 4, 1998. A provider of integrated network solutions, ECI TELECOM designs, develops, manufacturers and markets digital telecommunications and data transmission systems, enabling network operators to deliver cost-effective services. ECI TELECOM's systems provide capacity expansion, flexibility and management functions to better utilize existing and new telecommunications, data and integrated networks. This press release and additional information about the Company, is now available on ECI TELECOM's site on the World Wide Web: http//www.ecitele.com. Certain statements contained in this release, contain forward-looking information with respect to plans, projections or future performance of the Company, the occurrence of which involves certain risks and uncertainties, including, but not limited to, product and market acceptance risks, the impact of competitive pricing, product development, commercialization and technological difficulties and other risks detailed in the Company's filings with the Securities and Exchange Commission. >>>> FT: FRIDAY JULY 31 1998 Telecoms US TELECOMS: Surge in spending sets sector abuzz But the slow pace of deregulation means it is unclear when the US will see benefits of investment, writes Richard Waters The US is in the midst of the biggest burst of spending on new telecommunications networks since shortly after the invention of the telephone. >>>> Pat

To: Jack Colton who wrote (5822)	7/31/1998 11:12:00 AM
From: pat mudge	Read Replies (3) \| Respond to of 18016

The state of competition between copper and cable for high-speed access: msnbc.com <<< ÿ WILLIAM RODEY ADSL Forum ÿ ÿ ÿ EVEN THOUGH THE GAME has barely begun, analysts and industry executives alike say cable has a big early lead that will be difficult for its phone industry adversaries to overcome. ÿ ÿ ÿ ÿAt Home, the cable modem service jointly owned by Tele-Communications Inc. and several other large cable companies, recently said it closed the second quarter with 147,000 subscribers, up from 90,000 at the end of March and 50,000 at the end of 1997. ÿ ÿ ÿ ÿ Earlier this week, Motorola announced that it has shipped 170,000 cable modems already this year, and expects to sell around 320,000, total, in 1998. Analysts predicted the total number of cable modem subscribers will reach 425,000 to 500,000 by year's end. ÿ ÿ ÿ ÿ In contrast, ADSL (short for asymmetric digital subscriber line) is still struggling to get off the ground. GTE and the Baby Bells, the chief hawkers of ADSL services, are only now making their first moves from ADSL trials to commercial rollouts. ÿ ÿ ÿ ÿBruce Leichtman, a senior analyst with the Yankee Group, estimates there will be just 25,000 paying ADSL customers by the end of 1998. ÿ ÿ ÿ ÿ US West plans to have ADSL service available in 40 cities by the end of August. GTE has only begun selling ADSL commercially in the Seattle area, but it has already installed ADSL hardware in roughly 100 phone company "central offices" to prepare for a larger rollout. Pacific Bell is offering ADSL services in many parts of California, and BellSouth and Bell Atlantic are debuting ADSL commercially in August and September, respectively. ÿ ÿ ÿ ÿ "The cable companies have a one-year head start on the telcos," William Rodey, vice-chairman of the ADSL Forum, an industry group, conceded in a recent press release, "and that's important because once a customer signs on with a cable company, that's going to be a hard customer to get back." ÿ ÿ ÿ ÿ Fast, faster, fastest Phone companies are selling a consumer-friendly version of ADSL as a high-speed data service for small businesses, telecommuters and consumer Web surfers. At its top speeds, this "ADSL Lite" is around 25 times faster than today's quickest dial-up modem and around 12 times faster than an ISDN line. Here's what those speed differences mean as you cruise the Internet: [chart omitted] ÿ ÿ ÿ ÿ Most home Web surfers now log onto the Internet using dial-up modems with top speeds of 56 kilobits per second. ADSL services now debuting, by contrast, can ship data at speeds ranging from 256 kbps to 1.5 megabits per second - or five to 25 times faster than dial-up connections. ÿ ÿ ÿ At Home claims its cable modem service can ship data downstream from Web sites to home users at 10 mbps to 30 mbps (150 to 500 times faster than dial-up), and upstream from users at rates of 768 kbps to 10 mbps. Those speeds fall, however, if multiple users in a neighborhood log onto the network simultaneously. ÿ ÿ ÿ ÿ FASTER - AND CHEAPER ÿ ÿ ÿ ÿ In addition to a speed edge, cable modem services also have a price advantage over ADSL. The average price for Internet access over cable is around $40 per month. US West and GTE, however, offer a 256 kbps ADSL connection along with Internet access for $59.95 per month. SBC Communications Inc.'s Pacific Bell division offers a similar service in California starting at $89.95 a month. ÿ ÿ ÿ ÿ ADSL proponents themselves are concerned about their ability to reach price parity with cable modem services. At an industry forum hosted by the International Engineering Consortium in Chicago last week, "Everybody was concerned that at this point in time the cost of the hardware is such that they can't really get it down much," says Robert Larribeau, a consultant with the Multimedia Research Group in Sunnyvale, Calif. ÿ ÿ ÿ ÿ The price gap impacts strategy. "Clearly with [the phone companies'] ADSL pricing levels, they are not trying to go head to head with cable modems in areas where [both] are built out," says Michael Harris of Kinetic Strategies Inc. ÿ ÿ ÿ Rather, Harris believes, phone companies are directing their marketing muscle at small businesses and telecommuters who are less price sensitive than consumers, who access the Internet primarily for entertainment. ÿ ÿ ÿ ÿ That view is corroborated by Jeff Bolton, director of GTE's ADSL program. While GTE firmly believes its ADSL services will prove attractive to many home Internet users, Bolton says ADSL has technical advantages that are likely to be highly valued by business customers. ÿ ÿ ÿ ÿ "We're going after both markets, but I do think ADSL will appeal more to customer segments for whom the network reliability is very important, and also who have security concerns," Bolton says. "That's not to say cable modems are unreliable or unsecure, but it's a little bit more difficult to deal with security if you have 500 neighbors who are on your system." ÿ ÿ ÿ ÿ Bolton's comment is a veiled reference to a security problem that flared briefly on At Home in mid-1997, when some users discovered they could see files on their neighbors' PCs if the neighbors had not disabled a file-sharing feature of Windows 95. At Home corrected the problem, but At Home users still share their Internet connection with others on their local cable loop. ADSL connections, by contrast, go straight from a residence to a phone company switch. ÿ ÿ ÿ A pivotal milestone for both cable-based Internet services and ADSL is the development of standardized equipment that customers can buy at retail outlets. Currently, because of competing technical standards, a cable modem that works on a TCI cable system may not function on a Time Warner system; likewise, an ADSL modem that shoots data along a US West phone line may be lifeless on GTE lines. ÿ ÿ ÿ ÿ The cable industry is putting the final touches on its cable modem standards, and new equipment should hit retail shelves in time for this year's Christmas season. For ADSL, standardized modems are closer to a year away. >>>>