DSL

DSL Prime News Briefs

Expect fewer telecoms deals in the future, the wait for the next Copper Mountain DSLAM, and more.

by Dave Burstein
DSL Prime

November 14, 2000

Briefs

• The whole industry goes to DSLcon, but the global edition, set for Honolulu, Hawaii, February 4-8, looks to be especially popular. Denver April 9-12 just isn't as exciting.

Deals

• Aztech's certification by Copper Mountain for an ADSL modem has an immediate market—line shared customers of NorthPoint and Rhythms. But the industry is looking for the next DSLAM from CM—an ADSL based machine for which they hope to win telco customers. In the air are two very large contracts—the second source for BellSouth and the winners among the four current providers to Bell Atlantic/GTE/NorthPoint.
• DSL is also part of the Qwest search for a worldwide strategic partner, in which Nacchio is looking for remarkable terms from a single primary provider. That's a massive deal, with Cisco, Alcatel, and Nortel in the running (at least).

Competition

• AOL/Gateway announced a $695 internet appliance with a flat touch screen, for places a computer can't fit or people don't want to deal with a full computer. Gateway promoting this as a machine for the kitchen—hope it's appropriately hardened. Gateway will be working with Broadcom on Home PNA—and AOL presumably with Time Warner on a cable modem. Microsoft will answer back with a product this week.
• Teligent uses wireless to get to the rooftop, but their business is comparable to the basement DSLAM vendors. Their financial situation is excruciating, with a devastated stock, bonds trading at default level, and money sources threatening to pull the plug.

People

• Dirk Notelaers has taken over as VP Network Design at pan-Asian provider Qala in Singapore. Vendors be advised; he knows all the tricks, coming from the Alcatel team that implemented most of the major DSL infrastructure in Asia-Pacific.
• Armando Geday of Globespan must be a fine orator. After his investors' presentation last week, the stock rose 30% the next day. One point he made clear to us was that the CLEC problems should have little, in any, impact on the overall chip market. Chip demand is driven by how many lines are sold, and overall demand continues strong, especially internationally. Cisco's announcement of inventory reductions drove down the price of Broadcom and Globespan, but that appears exaggerated; we have not been able to identify excess inventory of DSL chips, which are just emerging from shortage. Increased supply, of course, may lead to competitive price drops—we haven't detected that move as yet, but we're watching for some second tier vendors to buy some market share and reduce everyone's gross margins.
• Craig Gentner, Redback's CFO, announced he will resign for reasons of family health.

Stock market

• Alcatel's ads boast "IN THE OPTICAL MARKET ... there is no area where Alcatel doesn't excel." But Light Reading, an invaluable source, reports that Alcatel is busy shopping for a metro optical equipment manufacturer in the $1-2B range. Redback would have a long way to fall to fit the budget.
• Telecommunications analysts face a tough job market going forward, with fewer deals succeeding and lower values for the deals that get done. The hold on the Verizon Wireless IPO cost the street tens of millions in fees; firms that don't get a piece of the few major telco financings will scramble have to scramble hard. A few months ago, managing directors flew private jets to make million-dollar offers to analysts; if the telco stocks stay down, next year some of the same firms are likely to cut jobs instead. Wall Street can be as brutal to its own as it has been to the companies in this market.
• Suresh Nihalani told Reuters he expected their voice-over-DSL equipment to see sequential sales growth of 20% over the next year.

Copyright 2000 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

"The power of the printing press belongs solely to those who own the presses"
—A.J. Leibling

The Internet is the cheapest printing press ever invented.

—End

 

Related articles:
	[Nov. 13, 2000]	DSL Prime News: The Inside Source
	[Nov. 10, 2000]	America Online Launches 'Instant AOL'