Mr. Fun --
I haven't intentionally dropped our debate but have been busier than usual the last several weeks.
I believe that DT and FT are unlikely to put out a big release, since they are essentially expanding existing networks. Furthermore, most big investors are well aware that NN already has those accounts - to grow market share, NN has to hang on to its incumbencies AND take new business. It is the latter that is at issue here.
I believe it's the GlobalOne contract that's in question and while the FT and DT incumbency may be established already, the size of the overall contract --- including GlobalOne as a separate entity --- will make debates over whether it's a renewed or initial contract redundant. The dollars will speak for themselves.
As for NN revenues being withing shouting distance of ASND. Certainly true, but as you have seen from previous posts, I expect ASND's ATM business to grow more quickly than NN's.
Your statement has no more validity than my saying I think NN's growth prospects are greater than Ascend's. Either way we're speculating.
In addition, there is no comparison between the growth prospects of NN's TDM business (expected to decline 5-10% per year) and ASND's remote access business (expected to grow >25%) In addition, ASND's impressive installed base of over 7million access ports with the world's largest ISPs is an extremely powerful platform for VoIP, FaxIP, VPN, etc. Also a fact unlikely to be ignored by potential acquirors.
Even with a declining TDM business, NN's kept up with ASND in revenues. I don't know how many access ports they've installed, but I do know their customers include 300 of the world's largest telecommunications service providers and more than 10,000 corporations and institutions, giving them the same strong platform for VoIP, VPN, and other services as Ascend.
As for NN's situation being analogous to ASND in March. NN has missed 3 quarters, not just one; the TDM business is a time bomb that destroys visibility; and believe it or not, NN management is even more poorly regarded by Wall Street than Mory and company. Alan Lutz is a good start, but he'll need to put up a track record before anyone puts NN into a prominent place in their portfolio.
I was referring to how many quarters of hitting numbers it would take to be back in favor with the Street. I don't believe I counted how many quarters either company had missed. Nor have I stooped to comparing which CEO has more dirt thrown in his direction. Judging by information gathered over the past several weeks at conferences on both coasts, Alan Lutz has gained the confidence of quite a few top tier investment houses and institutional funds, some of whom you'll be hearing from once earnings are out of the way.
As for what gets implemented for IP over ATM. The one thing of which you can be confident is that it won't be CSI. Too much of a leap of faith for engineers weaned on distributed routing architectures. Based on discussions with Internet guys, I expect some form of MPLS to emerge as a base standard, but with each vendor adding bells and whistles to help carriers deliver differentiated services. But again, we'll see.
You have amazing confidence when half the industry still hasn't decided. Incidentally, did you see the following?
newbridge.com
<<<
The VIP architecture comprises the following components:
Service Points
Service points join the service provider and the business user. They groom traffic, request service attributes and implement policies at the network edge for the VPN, using standard interfaces such as multi-protocol label switching (MPLS) and carrier scale internetworking (CSI). The VIP solution provides the wide range of service points service providers require to address business customer needs. This range includes the local area network (LAN), wide area network (WAN), dial-up, xDSL and wireless interfaces that provide the broad reach needed to connect the physical enterprise and its campuses with the service provider network, residences or the Internet.
>>>>>
Finally, I'm sorry I lost credibility, but I stand by my statement that the 36170 is an old platform. 3.1 software requires a major processor complex upgrade to even run - part of the reason gross margins on ATM at NN have fallen to 50% or less. From what I hear, this is a real band-aid for a fundamental design problem that will be finally rectified in the next generation switch due next year. The 36177 is a nice box, but designed as a customer premises ATM mux, competing more with the Cisco 3800 and Ascend Sahara than with the carrier edge and core switches.
Saying NN's 36170 doesn't run doesn't mean it doesn't. It only means it's your opinion it doesn't. Both companies have had glitches and I suspect both have solved their separate problems.
A couple months ago I pulled up some figures on NN's ATM sales.
3Q 97: There were 15 new customers for the MainStreetXpress 36170 system in the quarter, boosting the total number of customers for the product to approximately 90.
4Q97: The MainStreetXpress 36170 Multiservices Switch achieved record revenue and order intake. There were 17 new customers for the product in the quarter, bringing the total number of customers to over 100, as the product strengthened its position as the industry's flagship ATM system for the wide area network.
1Q98: The strong showing in WAN packet business was driven principally by the industry's flagship ATM system, the MainStreetXpress 36170 Multiservices Switch, which also achieved record revenue, order intake and backlog again this quarter. Both revenue and order intake for this product increased approximately 40% sequentially and were more than triple the revenue and order intake levels in the first quarter of fiscal 1997. There were more than 60 customers for the MainStreetXpress 36170 switch in the first quarter of fiscal 1998 alone, including 12 new customers. The product has now been sold to more than 120 customers throughout the world comprising many of the world's largest service providers.
2Q98: There were 80 customers for the MainStreetXpress 36170 switch in the second quarter alone, including 24 new customers. The product has now been sold to more than 130 customers, including many of the largest service providers throughout the world.
3Q98: There were approximately 80 customers for the MainStreetXpress 36170 multiservices platform in the quarter — including 20 new customers — boosting the total number of customers for the product to more than 250.
4Q98: There were approximately 80 customers for the product in the quarter – including another 15 new customers -- and more than 100 new customers during the year, as the product strengthened its position as the leading ATM system for the wide area network. The total number of customers for the MainStreetXpress 36170 Multiservices Switch is now over 260.
1Q99: Revenue growth for the MainStreetXpress 36170 platform was double digit sequentially and 75 percent compared with the first quarter of fiscal 1998. Book-to-bill for the product was significantly greater than one. . . . There were approximately 80 customers for the MainStreetXpress 36170 system in the quarter, including 20 new customers, bringing the total number of customers for the product to over 280. Customers include many of the largest service providers throughout the world. Sales of frame relay capability on the MainStreetXpress 36170 platform increased by approximately 50 percent sequentially and 75 percent year over year. Sales of circuit emulation capability on the platform increased by almost 40 percent sequentially and almost 400 percent year over year, as carriers around the world continue to migrate frame relay and other traffic onto the unifying Newbridge® multiservices platform. . . ."
So, in summary, I see potential value and substantial risk in NN. I believe ASND is a much better acquisition candidate for LU, even given the price difference. I think NN is six months from any major upward run.. . .
Let me ask you, since NN and ASND have fairly equal revenues, and both focus on the ATM WAN market, why would Lucent choose a company with 1) a much smaller global presence, 2) an inflated market cap, 3) no DWDM technology, 4) no LMDS technology, and 5) no family of affiliates that can be incorporated or spun off for cash?
I'm not saying NN's a candidate, but I am questioning why so many take it for granted Lucent wants Ascend.
One more thought and then I'm done. Since Ascend's burdened with quite a large take-over premium right now, why do you think holding it is less risky than holding NN?
Back to you.
Regards,
Pat |
