16-September-2002 Volume 9 Issue 174

Conference Announcement:  IP Networks and Services World Forum

• Last month, Marconi publicly outlined a major financial restructuring that would significantly reduce its debt.  Its ongoing business plan seeks to capitalize on the company’s established base in European optical networks (SDH and DWDM), its broadband routing and switching platforms (ASX 1000/4000 and BXR 48000 multi-service switch), and Wireless Software and Services (principally RF consulting, network planning and wireless Operational Support Systems).  http://www.convergedigest.com/Mergers/financialarticle.asp?ID=4770

SBC AND YAHOO! LAUNCH CO-BRANDED DSL SERVICES
SBC Communications and Yahoo! began joint marketing of DSL services in SBC's 13-state region.  The co-branded service features customized browser, email and personal web page hosting, alongside some premium Yahoo! services, such as auctions, classifieds, Consumer Reports and online storage.  Several pricing tiers are offered:  SBC Yahoo! DSL Basic provides downstream/upstream speeds of up to 384/128 kbps for $42.95 per month; SBC Yahoo! DSL Standard Plus provides downstream speed of 1.5 Mbps and upstream 128 kbps for $49.95 per month; and SBC Yahoo! DSL Deluxe provides 768 Kbps to 1.5 Mbps and 256 upstream for $59.95 per month.  Several sign-up incentives are available.  http://www.sbc.com/press_room/1,5932,31,00.html?query=20250
SBC Communications, September 13, 2002

SBC SAYS UNE-P PRICING CREATES DISINCENTIVE TO INVEST IN NEW NETWORKS
Speaking at the Bond Club in Chicago, Bill Daley, president of SBC Communications warned “unless the industry and the policymakers act wisely...the sick companies that are now circling the drain are threatening to drag the healthier ones with them."  Daley singled out the pricing of UNE-P (unbundled network element platform), saying that by mandating heavily discounted at prices well below cost the regulators are creating a disincentive for more companies to invest in viable networks.  Daley also reiterated the call for regulatory parity between cable companies and DSL providers.  http://www.sbc.com
SBC Communications, September 13, 2002

• Last month, SBC Communications has asked the federal bankruptcy court in New York that is handling the WorldCom case to ensure that SBC receives prompt payment for telecommunications services it continues to provide MCI WorldCom. SBC said that WorldCom owed it more than $300 million when it filed for bankruptcy on July 21 and that since then it has continued to rely on approximately $150 million a month in services from SBC, adding to its overall debt.

KPN ACQUIRES UK PART OF KPNQWEST
KPN acquired the UK portion of the former KPNQwest network.  The facilities include approximately 500 km connects London with Paris and Amsterdam.  Financial terms were not disclosed.  KPN said it is still holding talks about acquiring the KPNQwest network in Belgium and about a sea cable link to the United States. http://www.kpn-corporate.com/eng/pers/index.php?id=2.01&taal=eng 
KPN, September 13, 2002

• In July, KPN acquired the Dutch optical network and network operation center in The Hague of bankrupt KPNQwest.

BCE SELLS DIRECTORIES BUSINESS FOR CDN $3 BILLION
BCE sold its Bell Canada directories business for CDN $3 billion (US$1.9 billion) cash to Kohlberg Kravis Roberts & Co (KKR) and the Teachers' Merchant Bank.  BCE will use proceeds from the sale to pay for part of the acquisition price of SBC Communications' minority interest in Bell Canada and by Bell Canada for its ongoing financing needs.  The sale includes 209 print White Pages and Yellow Pages(TM) directories in Ontario and Quebec, and the electronic yellowpages.ca, toll-free and Canada 411 directories. Annual revenues, mainly from the sale of advertising, are approximately $590 million. As per regulatory requirements, Bell Canada will continue to maintain its White Pages database.  http://www.bce.ca
BCE, September 13, 2002

• BCE, Canada's largest communications company, encompasses wireline, wireless, data/Internet and satellite network interests as well as content creation businesses, including CTV (Canada's leading private broadcaster), The Globe and Mail (newspaper), and Sympatico-Lycos (ISP/portal).
• In June 2002, SBC Communications agreed to sell its 20% stake in Bell Canada back to BCE Inc. for CDN$6.32 billion.
• In August 2002, Qwest Communications sold its QwestDex publishing business for $7.05 billion to a new company formed by private equity firms The Carlyle Group and Welsh, Carson, Anderson & Stowe.
• In February 2002, Broadwing agreed to sell a majority interest in its Cincinnati Bell Directory business to a new company, CBD Media Inc., for $345 million.
• In January 2002, McLeodUSA, one of the largest CLECs, sold its directory publishing business to the UK-based Yell Group for $600 million.

NORWAY’S LYSE TELE BUILDS ETHERNET FTTH WITH CISCO
Lyse Tele, power utility company that serves 110,000 customers in southwest Norway, is deploying direct fiber connections to residential customers in the Stavanger region of the country using a Cisco Metro Ethernet network.  Lyse has connected 500 subscribers in the initial phase of the network rollout and is offering flat rate VoIP packages, video on demand, access to 40 channels of broadcast TV over a single IP-based Ethernet network.  The deployment includes Cisco Catalyst 6509 switches in the core, Catalyst 4006 switches in the Ethernet distribution network, the Cisco AS5350 Universal Gateway, and Cisco 3640 Internet routers.  Financial terms were not disclosed.  http://www.cisco.com
Cisco Systems, September 16, 2002

MATHSTAR INTRODUCES SINGLE CHANNEL TIA AND VCSEL DRIVER CHIPS
MathStar, a start-up based in Minneapolis, Minnesota, introduced two new single channel transimpedance amplifiers (TIAs) and a VCSEL driver chipset designed for integration into Gigabit Ethernet, Fibre Channel, and ATM transceiver modules and network systems.  The Gemini MS142701 and MS142501 are small form factor, single channel, 2.5 Gbps transimpedance amplifiers (TIAs) with a 3.3V supply voltage and a low power consumption of 75mW.  The first device features the ability to monitor incoming signal strength.  The Gemini MS142601 is a single channel, 2.5 Gbps, 850nm VCSEL driver with low power consumption of 115mW and a single 3.3V supply.  A unique feature is the waveform shaping for eye optimization, allowing the user to make sure the best signal is obtained. Additional features include a temperature compensation of modulation current through the use of an external resistor and an adjustable laser safety system.  All three products are available now.  http://www.mathstar.com
MathStar, September 16, 2002

• In August, MathStar closed $15.3 million in second round funding.  Since its founding in 1998, MathStar has raised over $33 million in funding.

NEC-JAPAN ADDS IKANOS VDSL-DMT CHIPSETS
NEC Corporation of Japan will use Ikanos Communications’ VDSL-DMT chipsets to build access concentrators and Customer Premise Equipment (CPE). The new products will employ ITU-T G.993.1 based Ethernet over Very High Bit Rate Digital Subscriber Line Discrete Multi-Tone (VDSL-DMT) to deliver multiple, high-bandwidth services over the existing copper infrastructure.  Ikanos said its chipsets would enable the NEC equipment to deliver speeds of over 50 Mbps over a single copper pair.  http://www.ikanos.com
Ikanos, September 13, 2002

• Ikanos has recently disclosed design wins with ZyXEL (Taiwan), Hyundai Networks (Korea) and Sumitomo Electric Industries (Japan). 
• In March, Ikanos closed its Series C funding round at $35 million. In addition to Ikanos' existing investors there were two new participants in the Series C funding; Presidio Venture Partners and Panasonic.

PACKETLIGHT NETWORKS EXTENDS BROCADE SANS OVER SONET
PacketLight Networks, a start-up based in Kfar Saba, Israel, announced that its metro optical transport systems have passed interoperability testing with Brocade Communications’ Storage Area Network (SAN) infrastructure. The company said its PL-16000 platform is capable of extending the reach of Brocade SANs to thousands of miles over legacy SONET networks.  The PacketLight PL-16000 combines classical DWDM with Layer 1 and Layer 2 transport aggregation, service ADM and cross-connect functionality.  http://www.packetlight.com 
PacketLight Networks, September 16, 2002

• PacketLight’s metro optical architecture is based on a multifunction optical node that combines a packet switch and a wavelength switch while supporting current SONET restoration schemes and future non-SONET-based protection. The platform is being developed to offer any service on any wavelength, including combinations of GigE, channelized TDM, storage or ATM services, all while maintaining full support of SONET protection mechanisms. The protocol-agnostic system would keep all inputs in their native format while allowing multiple services types to share a wavelength.

LUCENT EXPECT SEQUENTIAL DECLINE OF 20-25% IN Q4
Lucent Technologies said that continued market softness and ongoing uncertainty in customer spending levels particularly in North America, leads it to expect that Q4 revenues will decline approximately 20-25% sequentially from Q3.  The company now expects a Q4 pro forma loss per share of approximately $0.45, primarily as a result of the sequential revenue decline, charges associated with a significant customer financing default this month, and the inability to recognize tax benefits on losses.  Lucent plans to reduce its quarterly EPS breakeven revenue to a range of $2.5 billion to $3.0 billion.  http://www.lucent.com/press/0902/020913.coa.html 
Lucent Technologies, September 13, 2002

• On July 23, Lucent Technologies reported $2.95 billion in quarterly revenues, a 16% decline from the $3.52 billion in sales for the previous quarter and a 45% drop from the $5.37 billion of revenue for the same period during 2001. The decline in sales was primarily due to lower revenues from products from the Integrated Network Solutions (INS) group, which reported a 61% decline from a year ago.  At the time, Lucent announced several new restructuring actions, including a charge of $808 million and a further reduction of 7,000 employees. The company said it was planning to reduce its breakeven point to below $3.5 billion in quarterly revenue. As of June 30, 2002, the company had 53,000 employees (prior to the July 23 reductions). 

BROADLOGIC RAISES $10.8 MILLION FOR ITS CHIP DESIGNS
Broadlogic, a start-up semiconductor developer based in San Jose, California, secured $10.8 million in Series B funding.  The company is working on system-on-chip solutions for digital set-top boxes, cable modems, PVRs, home gateways etc.   The new funding was provided by August Capital, Cisco Systems, Intel Capital, Levensohn Capital Management, Presidio Venture Partners, and Walden International. http://www.broadlogic.com/
Broadlogic, September 15, 2002