Tuesday, October 28, 2008

Qwest Reports Mixed Q3 Results, Announces 1,200 Job Cuts

Qwest Communications reported Q3 net revenue of $3.4 billion, a decline of 2 percent year over year but flat with the second quarter of 2008. Q3 net income was $151 million, or $0.09 per diluted share. This compares to net income of $2.1 billion, or $1.08 per diluted share, during the same period in 2007. The year-ago period results included a one-time tax benefit of $2.1 billion and a $353 million charge for legal matters. The current quarter net income includes a charge of $63 million for severance and a lease restructuring benefit of $33 million. Adjusted EBITDA for the quarter was $1.08 billion compared to $1.15 billion in the prior year and $1.14 billion in the second quarter of 2008.

Some notable items from the Q3 2008 report:

  • Qwest expects to reduce its workforce during the fourth quarter by approximately 1,200, or a little more than 3 percent of the total workforce as of the end of the third quarter.

  • Customer demand for data services across all business segments contributed to 10 percent year-over-year growth in total data, Internet and video services revenue. Sequentially, data, Internet and video revenue grew by 4 percent on the strength of Business and Wholesale results.

  • Total voice services revenue of $1.8 billion declined 8 percent year over year and continued to be impacted by increased wireless substitution, cable competition and deteriorating economic trends. At the end of the third quarter, total access lines were 11.9 million -- a decline of 8.9 percent compared to the third quarter of 2007.

  • Mass Markets third quarter revenue was $1.4 billion, a 5 percent decline compared to the prior year and a 2 percent decline compared to the second quarter. Excluding wireless, revenue declined 4 percent year over year and 1 percent sequentially. Voice services revenue declined 9 percent compared to the prior year and 2 percent sequentially due to lower access lines. The launch of wireless customer migration efforts impacted wireless service revenue, which declined 15 percent year over year and 6 percent compared to the second quarter. This rate of decline is expected to accelerate in upcoming quarters. Data, Internet and video revenue improved 12 percent compared to the third quarter of 2007 and 1 percent sequentially.

  • Net broadband subscribers increased by 61,000 in the quarter with nearly 40,000 subscribers purchasing services over Qwest's FTTN network. The company continues to see strong demand for higher speed services with the majority of FTTN customers opting for connection speeds of 7Mbps or higher.

  • Video subscribers increased by 39,000 during the quarter resulting in total video subscribers of 761,000. Wireless subscribers fell by 45,000 due, in part, to migration efforts. At the end of the third quarter, Mass Markets access lines were 8.0 million, a decline of 9.7 percent from the year-ago period.

  • Mass Markets segment income declined by 7 percent sequentially and 5 percent compared to the year-ago period. Segment income margin of 47.2 percent fell from 49.9 percent in the second quarter and was flat compared to the year-ago period. In addition to the effects of on-going access line losses, the third quarter margin also reflects sequential increases in marketing and bad debt expense offset by lower wireless operating costs.

  • Third quarter revenue in Wholesale Markets was $815 million, a decline of 5 percent year over year as a result of local access line erosion and lower long-distance voice revenue. Sequentially, revenue declined by 1 percent as results in data and Internet revenue partially offset voice services revenue declines.

"In the quarter, our financial results were again mixed," said Edward A. Mueller, Qwest's chairman and CEO. "We are pleased with the rebound in broadband sales in the quarter, and our Business Markets reported a strong top-line. We also produced solid free cash flow. However, our margins were impacted by fewer consumer access lines and a less profitable revenue mix. Reflecting our cautious outlook on the near-term direction of the economy, we have taken a number of steps to keep our costs aligned with customer demand and maintain maximum financial strength and flexibility."http://www.qwest.com

MetaSwitch and Data Connection Report Record Revenue

Data Connection Ltd (DCL) announced record revenues of $118.1 million for the fiscal year ending August 31, 2008, an increase of 15.4% year-over-year, making the company profitable for the 27th consecutive year.

The company's MetaSwitch division grew 22% compared to the same period last year, and now accounts for 78% of the total revenue. Growth was driven both by larger Tier 1 carrier deployments and continued expansion of the customer base, to a total of more than 400 service provider and 250 OEM customers.

"Clearly we and our customers are subject to the same macro forces as the rest of the economy," said Ian Ferguson, chairman and founder of Data Connection and MetaSwitch. "However, we are seeing benefits from the current slowdown as our carrier and OEM customers search out suppliers who can deliver clear and immediate positive impact on their bottom line. This is what we do, based on our reliability, exceptional customer support and service, quality engineering and innovation. While the future is less certain than ever, we see this fundamental value proposition continuing to drive strong growth through 2009." http://www.metaswitch.comhttp://www.dataconnection.com

GMI 2008 Tests Six NGN Scenarios

GMI 2008 -- the MultiService Forum's (MSF) massive biennial interoperability event spanning three continents -- is currently underway with twenty-two vendor participants and some 225 devices under test. This year's event reflects the growing role of IMS in enabling network service integration. A particular emphasis on emerging IPTV applications has been underlined by the co-operation between the MSF and the Alliance for Telecommunications Solutions (ATIS). This is the first time the MSF has formally partnered with a standards organization.

GMI 2008 involves the testing of six physical scenarios, including 82 basic test cases with nearly 500 test permutations. The test plans extend over 600 pages.

The first two physical scenarios test End-to-End Session Control, with QoS, for a range of access technologies -- baseband, broadband, 3GPP, WIMAX, 3GPP2 & TD-SCDMA -- over a converged core network. The third scenario addresses IPTV, with an emphasis on specifications developed by the ATIS IIF. This is the first time standardized IPTV is being put to the test in a network context to validate automatic configuration of set top boxes, and to deliver true quality of experience.

The continuing growth in feature-rich mobile telephony underlines the significance of the fourth scenario: location based services, including routing and privacy issues. The solution under test is designed to work synergistically with that of other organizations such as NENA, and will make use of standards already in place.

Scenario five, Service Oriented Architecture (SOA), integrates IMS with web-based services. This scenario is designed to test the capability for carriers to access a virtually unlimited range of services for a public that is increasingly demanding the full richness of web services both at home and on the move. The final scenario addresses management issues, in particular the on-line management of IPTV set top boxes and collection of IPTV related statistics without the cost and delay that results from the servicing truck-rolls of today's TV systems.

"What's unique about our work" commented Roger Ward, President of the MSF, "is the way our members have collaborated to define six networked test scenarios of practical interest to major carriers as a focus for validating the MSF Release 4 architectural framework and supporting Implementation Agreements (IAs). With five major carriers and test labs hosting GMI 2008, we have had no trouble in attracting leading vendors from three continents to participate and are sure that we will achieve results that will be of great value both to MSF members and to the industry as a whole.

"In GMI 2008, interoperability testing is conducted first within each lab, and then between labs, for each of the six test scenarios. With so many results to collate, a customized test capture tool had to be developed specifically for this event, giving the MSF a unique capability to capture, automatically aggregate, and analyze globally distributed test results" Ward noted.http://www.msforum.org/http://www.atis.org/

ShoreTel's Revenue Rises to $35.9 million

ShoreTel, which supplies Unified Communications (UC) solutions, reported revenue for its first quarter of fiscal year 2009 of $35.9 million, an increase of 12 percent over the first quarter of fiscal year 2008 and a three percent increase over the prior quarter. GAAP net loss was $2.2 million, or $(0.05) per share, compared to GAAP net income of $2.6 million, or $0.06 per diluted share, reported in the first quarter of fiscal year 2008. GAAP net loss in the first quarter of fiscal year 2009 included $2.7 million in stock- based compensation expenses, compared to $1.1 million reported in the first quarter of fiscal year 2008.

GAAP gross margins for the first quarter of fiscal year 2009 were 64 percent, compared with 64 percent during the same quarter last year. GAAP gross margins in the first quarter of fiscal year 2009 included $216,000 in stock-based compensation expenses, compared to $66,000 in the first quarter of fiscal year 2008. Non-GAAP gross margins, which exclude stock-based compensation expenses, were 65 percent in the first quarter of fiscal year 2009, compared with 64 percent during the same quarter last year.

ShoreTel said it signed more than 800 new customers during the quarter, a quarterly record, bringing total customers to more than 8,800.http://www.shoretel.com/

Comcast Delivers Solid Q3 Results, Revenue hits $8.5 Billion

Comcast 's revenue increased 10% in the third quarter of 2008 to $8.5 billion, while Operating Cash Flow increased 10% to $3.2 billion and Operating Income increased 20% to $1.7 billion. This growth was due to solid operating results at Comcast Cable and in the Programming segment, as well as the positive impact of cable acquisitions.

Some highlights for Q3:


  • Basic video subscribers declined 147,000 or 0.6% sequentially during the third quarter.

  • Added 417,000 digital cable subscribers during the third quarter - 69% or 16.8 million video subscribers have digital service.

  • 7.3 million or 44% of digital cable subscribers have advanced services such as digital video recorders (DVR) and/or high-definition television service (HDTV).

  • Video revenue increased 4% to $4.7 billion in the third quarter of 2008 from $4.5 billion in 2007. The revenue increase reflects price increases for video services and growth in digital video customers, offset in part by an increasing number of customers in bundles and promotional offers, as well as a decline in basic video customers.

  • Basic video subscribers decreased by 147,000 to 24.4 million during the third quarter, including an estimated loss of 15,000 subscribers due to the hurricanes, compared to a 56,000 subscriber decline in the third quarter of 2007. Year to date through September 30, 2008, basic subscribers decreased 342,000, reflecting a more challenging competitive and economic environment.

  • Comcast added 417,000 digital cable customers in Q3 2008, compared to 503,000 in the same period one year ago. Year to date through September 30, 2008, Comcast added 1.2 million digital cable customers. PPV revenue increased 9% in the third quarter and for the first nine months of 2008.

High-Speed Internet

  • Added 382,000 high-speed Internet subscribers during the third quarter - penetration reached 30% of homes passed or 14.7 million customers.

  • High-speed Internet revenue increased 9% to $1.8 billion in the third quarter of 2008 from $1.7 billion in 2007 reflecting an 11% increase in subscribers and a 2% decline in average monthly revenue per subscriber to $41.74 as a result of additional bundling and the recent introduction of new offers and speed tiers.


  • Added 483,000 Comcast Digital Voice (CDV) customers during the third quarter - penetration reached 13% of homes passed or 6.1 million customers.

  • Phone revenue increased 44% from $479 million to $690 million in the third quarter of 2008, reflecting significant growth in CDV subscribers and a 5% decrease in average revenue per subscriber to $38.98, resulting from an increase in the number of customers receiving service as part of a promotional offer or in a new product package. The increase in CDV revenue was also partially offset by a $49 million or 96% decline in circuit-switched phone revenue as Comcast exits that product offering.

  • Year to date through September 30, 2008, phone revenue increased 52% from $1.3 billion to $1.9 billion, reflecting significant growth in CDV customers, partially offset by a $182 million decline in circuit-switched phone revenue.


  • Advertising revenue decreased 10% to $374 million in the third quarter of 2008 from $417 million in 2007, reflecting one less week in the broadcast advertising calendar as well as continued softness in the advertising marketplace, only partially offset by an increase in political advertising. Year to date through September 30, 2008, ad sales decreased 3% to $1.1 billion.

Motorola Opens Broadband Wireless Lab in Malaysia

Motorola has set up a new MMU-Motorola Wireless Broadband Technology Lab at Multimedia University ("MMU"), Cyberjaya, providing a conducive wireless network environment for students and faculty members to conduct applied research on the latest wireless broadband technologies. The Wireless Broadband Technology Lab is the first of its kind in Malaysia and supports MMU's goal to "Enable the Knowledge Society through WiMAX".

Motorola is providing its MOTOwi4 wireless broadband equipment, including Canopy, MOTOMESHTM Duo, wi4 WiMAX access points and customer premises equipments (CPEs), for the Lab.http://www.motorola.com

Australia's AAPT Selects Alcatel-Lucent to Merge Networks

AAPT, one of Australia's three largest telecommunications companies and part of the Telecom New Zealand Group, has selected Alcatel-Lucent's IP/MPLS Terabit Service Router Platform. AAPT, which merged with PowerTel in 2007, is consolidating its two network platforms increasing capacity and enhancing the overall flexibility of the network. This project is expected to be completed in May 2009. Financial terms were not disclosed.

Alcatel-Lucent will deploy its IP/MPLS Terabit Service Routing portfolio including the 7450 Ethernet Service Switch (ESS), the 7750 Service Router (SR) and the 5620 Service Aware Manager (SAM) platform. The Alcatel-Lucent 7450 ESS will enable AAPT to offer carrier grade Ethernet VPN services while the 7750 SR will enhance IP capacity and service flexibility within the network; the 5620 SAM will streamline network commissioning, service activation, service troubleshooting and OSS integration enabling AAPT to rapidly deploy and flexibly manage advanced enterprise services. http://www.alcatel-lucent.comhttp://home.aapt.com.au

Japan's WILLCOM Selects Alcatel-Lucent IP Routers

WILLCOM, which provides mobile communications using PHS (Personal Handyphone System) to some 4.6 million subscribers (as of end of January 2008), has selected Alcatel-Lucent's IP service router portfolio as the foundation for its wireless IP network. The Alcatel-Lucent service routers will enable WILLCOM to support increased traffic growth and new advanced service features required for the commercial launch of their next-generation wireless services, eXtended Global Platform (XGP) in October 2009.

Alcatel-Lucent deployed its 7750 and 7710 Service Routers (SR) into the core and edge of WILLCOM's network following a series of stringent test and evaluations, including a field trial for more than a year with Itochu Techno Solutions Corporation (CTC). The Alcatel-Lucent IP/MPLS service-oriented architecture provides WILLCOM with a resilient, highly differentiated network with the powerful quality of service required for innovative, next-generation wireless IP services. Financial terms were not disclosed.

"Preparation for the launch of our XGP has been progressing steadily, with the Alcatel-Lucent's solution performing very well in the core and edge of our IP network. It is meeting the high standards we need to provide our customers the kind of quality services they can expect from us ", said Yoshiki Chika, Director, Executive Vice President, WILLCOM Inc.

XGP (eXtended Global Platform) is a wireless broadband communications based on current PHS (Personal Handy Phone) with additions of advanced technologies such as OFDM and MIMO. WILLCOM has chosen the commercial branding name of XGP as "WILLCOM CORE (Communication Of Revolution & Evolution)" and aims to be the "CORE" of your communications and business by "evolving" to an open broadband based on the "revolutionary" technology of microcell network made up of 160k base stations like PHS. Also, XGP has been standardized at PHS MoU Group and has been recommended as a Broadband Wireless Access system by ITU (XGP: ITU-R M. 1801).http://www.alcatel-lucent.com

Cox Adds Caller ID-to-the-TV

Cox, which ranks as the third largest cable operator (6.2 million customers) and the eighth largest phone company in the U.S. with more than 3 million residential and business telephone customers, introduced a Caller ID to the TV capability.

TV Caller ID is currently offered in Oklahoma City, Okla., at no additional cost to Cox customers who subscribe to Cox Digital Telephone with Caller ID and Cox Digital Cable. The capability will be expanded to additional markets in 2009.

Bell Canada's Q3 Revenue Rises 1.8%

Bell Canada's Q3 revenue rose 1.8% to $3.8 billion while EBITDA was up 2.4%. Bell's operating income was $451 million, or 34% lower than last year due to restructuring and other charges of $320 million this quarter. These charges include amounts for workforce reduction initiatives, the proposed privatization transaction, and the relocation of employees and the closing of real estate facilities. Adjusted for these charges, Bell's operating income grew by 3.6%.

Some highlights:

  • The Bell Wireless segment had 113,000 postpaid net activations, or 49% more than last year, with postpaid churn improving to 1.1% from 1.4%. Total net activations were 117,000, reflecting a decrease in prepaid net activations to 4,000 from 61,000 the year before. Total Bell Wireless operating revenues increased by 9.3% and Bell Wireless EBITDA grew by 6.0%.

  • Wireline momentum continued with improvements in residential line losses for the fourth consecutive quarter and improving performance in the high-speed Internet business. High-speed Internet net activations were 33,000 this quarter, compared with 29,000 in Q3 2007, bringing Bell's total high-speed Internet customer connections to 2,046,000.

  • Residential local line losses improved by 32,000 to 72,000 this quarter from 104,000 in the same quarter last year. Total NAS declined by 10.0% over the last twelve months. However, total NAS declined by just 5.8% when normalized for the previously announced contract termination with a major wholesale customer and a beginning-of-year adjustment to Bell's residential NAS base following a review of historical records.

  • Bell's operating revenues grew by 1.8% to $3,757 million this quarter as growth in wireless, video, and data revenues more than offset declines in local and access, long distance, and equipment and other revenues. Revenues from Bell's growth services portfolio of wireless, video, high-speed Internet and other services, such as ICT solutions, grew by 8% and now represent 60% of Bell's revenues.

Alcatel-Lucent Names Robert Vrij as Head of the Americas Region

Alcatel-Lucent has appointed Robert Vrij as head of the Americas Region. Vrij will report to Alcatel-Lucent CEO Ben Verwaayen and will be responsible for overseeing all of the company's sales and operations in North America and CALA (Caribbean and Latin America.) He will be a member of the company's management committee and his office will be in Murray Hill, New Jersey, the headquarters for the Americas region.

Most recently, Vrij was president and chief executive officer of Openwave Systems where he reduced total expenses in excess of 30%, improved gross margins, rationalized the portfolio, delivered new technology leading products to market and put the company on a path to profitability. From 2004 to 2007, he was the Senior Vice President of Worldwide Sales and Marketing Solutions with Genband, a provider of IP solutions to service providers. He also held senior sales positions with Nextiraone (now Blackbox) a reseller of converged telephony products for the enterprise market. Vrij also held leadership positions with Lucent Technologies from 1999 to 2002 including responsibility for the company's wireline business in the Europe and Middle East Region. And from 1993 to 1997 he held a number of sales, marketing and management positions with AT&T's global and regional joint ventures including as director of worldwide voice and data services and channel management operations.

AT&T Installs Energy-Saving Software on its Own PCs

AT&T is installing NightWatchman PC power management software from 1E on 310,000 desktop computers across its domestic operations to help improve energy efficiency.

AT&T said that powering down its corporate PCs during non-work hours would save more than 135 million kilowatt hours of electricity a year and eliminate 123,941 tons of carbon dioxide emissions -- equivalent to the electricity required to power 14,892 homes.