Monday, January 30, 2006

AT&T Says Merger Synergies Above Expectations, Outlines Growth Sectors

AT&T issued new financial guidance, saying cost synergies from its recently completed merger are ahead of expectations and power double-digit adjusted earnings per share growth and strong cash flow growth over the next three years.

The company said the net present value of AT&T merger synergies is now expected to be approximately $18 billion, versus its January 2005 estimate of $15 billion. AT&T now expects total synergies from the merger to reach an annual run-rate approaching $3 billion in 2008. Overall integration costs are largely unchanged from earlier estimates, although they will be incurred sooner due to the transaction's earlier-than-expected close and accelerated project schedules.

"Through strategic investments and internal growth, we've significantly reshaped our revenue mix to concentrate on the industry's best growth areas for the future -- wireless, broadband and business services," said AT&T Chairman and Chief Executive Officer Edward E. Whitacre Jr. "Progress on the revenue side combined with our focus on lowering our overall cost structure provides a clear path for strong performance."

AT&T has four major operational priorities over the next three years: lead in business, lead in wireless, grow in broadband and reshape the company's cost structure.

  • In wireless, Cingular is on or ahead of schedule in all of its major integration initiatives and expects to deploy its 3G UMTS/HSDPA wireless data network in most of the top 100 metropolitan areas by the end of this year. Over the past several quarters, Cingular has seen accelerating revenue growth rates, and in 2006, it expects to deliver an upper single-digit percentage increase in revenues. Cingular expects to achieve industry-leading metrics, including margins, by the end of 2007.

  • In business services, AT&T targets growth in areas such as managed services, network security, optical networking, enhanced VPN (virtual private networking) and enterprise wireless.

    Separately, AT&T announced plans to offer a range of integrated wireless voice and data services on a GSM network to enterprises under the AT&T brand starting later this year.

    Additionally, AT&T announced the general availability of AT&T Multi-Carrier Solutions, a managed service designed to help enterprises analyze and achieve the most cost-efficient and effective wireless services for their business needs.

  • In broadband, AT&T expects to continue expansion of its DSL line base, and it is on track to scale Project Lightspeed service starting in mid-2006, reaching 21 markets by year's end. AT&T began a controlled market launch of the service in December 2005. Customers are seeing bandwidth speeds of at least 20-25 Mbps, which will deliver four streams of high-quality video -- including one HD stream -- along with high-speed Internet access and, in the future, consumer VoIP service.

  • In cost-structure improvements, AT&T has initiatives under way and planned across its operations. These projects, which are in addition to merger integration, are expected to deliver run-rate cost savings of approximately $500 million this year, growing to $1.2 billion in 2008.

CAPEX in 2006 are expected to be $8 billion to $8.5 billion -- in the low teens as a percentage of revenues. This includes capital for merger-integration projects and Project Lightspeed deployment.

Cable and Wireless Announces Restructuring

Cable and Wireless announced a significant restructuring of its business, including the following points:

  • splitting the company into two self-contained operational units -- UK (including Bulldog) and International

  • the resignation of the Francesco Caio and the elimination of his position as Group Chief Executive.

  • a reduction of its corporate operations

  • John Pluthero has been appointed head of the UK operations, while Harris Jones will serve as managing director of International operations.

The company currently expects EBITDA for its UK operations to be no higher in its next fiscal year than at present. Cable & Wireless cited several reasons for its actions, including continuing margin erosion, high levels of churn and the acceleration of the switch from legacy services to IP.

Cisco, Intel and Oracle Push for Medical IT Improvements

Cisco Systems, Intel Corporation, and Oracle have formed a Silicon Valley Pay-for-Performance Consortium aimed at pushing leading medical care providers in the area to adopt health information technologies.

The Silicon Valley Pay-for-Performance Consortium brings together Cisco, Intel and Oracle as well as some of the largest medical groups and IPAs in Northern California, including Camino Medical Group, Kaiser Permanente, Palo Alto Medical Foundation, San Jose Medical Group, Santa Clara County IPA, Santa Cruz Medical Foundation and Stanford Hospital and Clinics.

By establishing rewards for the use of processes and technology, the collaborative hopes to accelerate the transition to electronic health records and the use of automated decision support tools. Such tools can help doctors determine which course of therapy might be best for a particular patient given the latest science and medical and family histories.

Belgium's Mobistar Selects Redback's SmartEdge

Mobistar, part of the Orange Group and Belgium's second largest mobile operator, has selected Redback's SmartEdge Service Gateway platform to build a DSL network to deliver new broadband services across Belgium. The SmartEdge Service Gateway systems are being deployed both in the core and at the edge of Mobistar's new broadband network, providing carrier class routing and consumer scale subscriber management services.

Georgia's Pineland Telephone Deploys Occam's BLS

Georgia's Pineland Telephone Cooperative is deploying Occam Networks' BLC 6000 System to deliver a full array of Triple Play services to residences and businesses in an eight-county area of south central Georgia. Currently, the cooperative has installed the Occam BLC 6000 in approximately 35 remote cabinets and is delivering POTS, ADSL and IP Video service to its subscribers, with hundreds of its 13,000-plus subscribers receiving IP Video service to date.

In 2001, Pineland began a five-year plan to shorten its local loops with a goal of bringing the electronics closer to the subscriber. At the time, the cooperative's access network was ATM-based, but as it began the process of shortening its local loops it became clear that the industry was moving to IP and Ethernet technologies in the access network. Pineland began using the BLC 6000 to deliver POTS and ADSL. In 2004, the cooperative made the decision to begin offering IP video services to its subscribers, building their own video headend and using the BLC 6000's Ethernet capability as a transport for the video stream.

Telewest Chooses Corning NexCor Fiber for Upgrade

Telewest, a leading UK broadband communications and media group, will deploy Corning's access-optimized NexCor single-mode fiber in the latest upgrade of its hybrid fiber-coaxial (HFC) networks. Telewest is progressively upgrading its network, which currently passes 4.7 million homes. This latest expansion, which includes Corning NexCor fiber, will serve network upgrades in the Preston and Liverpool networks in northwest England.

Silver Peak Raises $13 Million for Network Acceleration Appliances

Silver Peak Systems, a start-up based in Mountain View, California, secured $13 million in series B funding for its enterprise-class network acceleration appliances.

Silver Peak is developing "Local Instance Networking" technology that reduces "server sprawl" and achieves exceptional acceleration for all applications, including email, web, file transfers, real-time applications like Citrix and media applications such as VoIP. Silver Peak's NX Series appliances use "Network Memory" to eliminate the transfer of redundant information over the WAN to deliver a secure, LAN-like experience for distributed applications. It is the only solution to operate at the network layer, providing scalability and performance enhancements across all enterprise applications through a combination of local information storage, advanced data fingerprinting, data reduction, compression, QoS and latency/loss mitigation.

Duff Ackerman & Goodrich (DAG) LLC led the round, which also included investments from Benchmark Capital, Greylock Partners and Pinnacle Ventures.

Zhone Reports Q4 Revenue of $53.2 Million

Zhone Technologies reported Q4 2005 revenues of $53.2 million, compared with $28.1 million for the fourth quarter of 2004. Net loss for the fourth quarter of 2005, calculated in accordance with Generally Accepted Accounting Principles ("GAAP"), was $107.2 million or $0.73 per share compared with a net loss of $3.8 million or $0.04 per share for the fourth quarter of 2004.

Zhone noted that it shipped over 675,000 DSL access ports in 2005, putting it among the top three suppliers of DSLAM equipment in North America.

"We are very pleased with this quarter's performance, especially in the continued adoption of our flagship SLMS products," said Mory Ejabat, Chairman and Chief Executive Officer of Zhone.

TranSwitch Acquires Mysticom for Multi-Gigabit Ethernet Transceivers

TranSwitch has acquired Mysticom, a privately-held developer of high-performance, low-power, multi-Gigabit Ethernet transceivers for the communications industry. TranSwitch acquired the Israel-based company for approximately $5 million in stock.

Mysticom, a fabless semiconductor company, designs, develops and markets 10 Gigabit Ethernet transceivers for a variety of applications, including data center, enterprise, server, storage and high-definition video. Mysticom's family of 10 Gigabit Ethernet transceivers delivers superior interconnect performance over a variety of cable media and is fully compliant with CX4, LX4, and XAUI standards. The patented designs of these products provide extremely low-power consumption in very small form factors. Mysticom also markets intellectual property (IP) cores for Fast Ethernet (10/100) and Gigabit Ethernet (GbE) PHY applications.

Cisco Appoints Michael Capellas to Board of Directors

Cisco Systems announced the appointment of Michael Capellas, former president and CEO of MCI, to its board of directors. Capellas, 51, joined MCI as chairman and CEO in 2002 and became president and CEO in March of 2004. Capellas left MCI as planned in early January 2006 upon the company's acquisition by Verizon Communications Inc. Previously, he held multiple CXO level positions at Compaq including serving as chairman and CEO from July 1999-May 2002, until Compaq merged with Hewlett Packard, at which time he became president of the combined company.

With the election of Capellas, Cisco's board now consists of 12 members, including: Carol A. Bartz, chairman and CEO, Autodesk, Inc.; M. Michele Burns, former CFO, Mirant Corporation; Larry R. Carter, senior vice president, Cisco Systems, Inc.; John T. Chambers, president and CEO, Cisco Systems, Inc.; John L. Hennessy, Ph.D., president, Stanford University; Richard M. Kovacevich, chairman and CEO, Wells Fargo & Company; Roderick C. McGeary, chairman, Bearing Point, Inc.; James C. Morgan, chairman, Applied Materials, Inc.; John P. Morgridge, chairman of the board, Cisco Systems, Inc.; Steven M. West, founder and partner, Emerging Company Partners; and Jerry Yang, co-founder, chief Yahoo! and director, Yahoo! Inc.

Cingular Wireless and Motorola Debut SLVR with iTunes

Cingular Wireless announced the availability of the ultra-slim Motorola SLVR L7 mobile phone with iTunes.
SLVR's design includes sleek metal housing, a vivid color display and precision cut keypad. Key features include VGA camera, video capture and playback, and 512 megabytes of optional expandable memory. iTunes functionality allows for up to 7 hours of music, or about 100 songs. Cingular is pricing the phone at $199.99 with a two-year service agreement.


Boingo Adds 850 Hot Spots in Portugal

Boingo Wireless signed a roaming agreement with PT Wi-Fi, a division of Portugal Telecom, that adds more than 850 popular Portuguese wireless locations including hotels, airports and retail centers to the Boingo Roaming System.

Boingo now offers access to over 25,000 locations from more than 100 leading Wi-Fi operators into one worldwide network.

NBC Employs Avaya IP telephony for Torino Olympic Winter Games

NBC is using an Avaya IP telephony solution to provide communication capabilities linking the International Broadcast Center and NBC's Field Shop with sports venues in Torino, Italy, NBC Olympics headquarters in Stamford, Conn., and NBC Studios at 30 Rockefeller Center in New York City.

This is the fourth consecutive Olympics Games at which Avaya as provided services to NBC.

AWA Builds Mesh VoWLAN in Spain with Meru, Firetide

AWA, a privately held wireless company in Spain with ties to I+D, plans to roll out commercial WLAN and mesh networks with more than 12,000 access points in Spain. The network that AWA is currently deploying will place more than 4,500 of the 12,000 access points in gasoline stations. Access points will also be deployed in the main shopping centers and in public buildings.

The European distributor OptiCall will deliver products from Firetide and Meru Networks to build the network. The network will be centrally managed by the NMS platform.

OptiCall's VoWLAN solution includes Firetide's HotPort Mesh Network, Meru Networks WLAN System, and QTEK dual mode mobile phones with preinstalled WBX/Uniphone client from OptiMobile which ensures a single user interface for both VoIP over WLAN and GSM.


USAF Awards Lockheed Martin $491M Contract for 3rd EHF Satellite

The U.S. Air Force has awarded Lockheed Martin a contract for $491 million to build a third spacecraft for the Advanced Extremely High Frequency (Advanced EHF) program constellation.

The Advanced EHF system is the successor to the Milstar system and will offer greater total capacity and offer high channel data rates capable of handling tactical military communications such as real-time video, battlefield maps and targeting data.

Lockheed Martin said development of the first Advanced EHF satellite is progressing on schedule. The team recently delivered the spacecraft core structure to Lockheed Martin's Mississippi Space & Technology Center for integration with its propulsion subsystem. The second spacecraft is close behind in the production flow.

Mazu Networks Hires Former VeriSign CSO

Mazu Networks, a start-up offering behavior-based network security solutions, named Charles Kaplan as chief security strategist. Previously, Kaplan was the chief information security officer for VeriSign Managed Security Services (MSS), where he provided subject matter expertise and direction internally as well as customer facing security guidance to the company's top MSS clients.

Lockheed Martin Upgrades Legacy Global Positioning System

Lockheed Martin has upgraded the software processing and modeling for the U.S. Air Force's legacy Global Positioning System (GPS).

The recently completed update, named the Legacy Accuracy Improvement Initiative (L-AII), doubles the amount of navigation data collected and provided to Air Force operators, enhancing the Air Force's ability to monitor GPS satellites and improve system accuracy 10-15 percent for users worldwide.

Lockheed Martin is also the prime contractor for the GPS IIR program and is under contract to modernize eight GPS IIR satellites which will provide significantly improved navigation performance for U.S. military and civilian users worldwide. The first modernized GPS IIR satellite was launched successfully in September 2005 and became operational in December 2005.