Tuesday, April 21, 2009

Ikanos to Acquire Conexant's Broadband Access Business

Ikanos Communications has agreed to acquire he Broadband Access product line from Conexant Systems for $54 million in cash and the assumption of certain employee and facility related liabilities.

Ikanos and Conexant account for a cumulative 330 million broadband access ports shipped to date. Conexant's Broadband Access product line has traditionally been strong in North America and China while Ikanos has led in Japan, Korea and Europe. The combined company will be well positioned to address the global market for broadband semiconductors, and better serve customers in all geographies. Ikanos will build on its status as the VDSL market share leader, will add substantial ADSL market share, and will have a broad product portfolio that includes SHDSL, 802.11 b/g wireless networking, Ethernet switching, and passive optical networking (PON). In addition, the combined company will have both MIPS- and ARM-based processors that are powering broadband access networks around the world.

The acquisition is expected to more than double Ikanos' revenue, while providing significant leverage in its cost and spending structure. Ikanos also expects that the transaction will be accretive to its non-GAAP earnings per share within the first year after the close of the transaction.

"With the number of home networks doubling to more than 400 million by 2013 according to analysts, there's a substantial opportunity for Ikanos to address the need for delivering bandwidth to and throughout the home," said Michael Gulett, president and CEO of Ikanos. "We'll use our strengthened leadership in broadband access as a platform on which to build new offerings that extend multi-play services seamlessly everywhere they are needed."

In connection with this transaction, Tallwood Venture Capital, a leading investment firm focused on the semiconductor industry, has agreed to purchase 24 million shares of Ikanos common stock for $42 million, or $1.75 per share. Tallwood will also receive warrants to purchase an additional 7.8 million shares of common stock at $1.75 per share. The deal is expected to be completed in the third quarter of calendar year 2009.

CWA Comments on AT&T's Results and Ongoing Labor Negotiations

The Communications Workers of America, which is currently negotiating a new labor contract with AT&T, said the better-than-expected financial results posted by AT&T demonstrate that the fact that AT&T is well-positioned to lead the telecommunications industry into the future digital age. The union believes AT&T is well-positioned to help move our nation out of economic crisis and back into prosperity. AT&T remains the 7th largest company in the world, in terms of market capitalization. It posted $12.9 billion in profits last year. CWA represents 180,000 workers at AT&T.

CWA President Larry Cohen pointed out that AT&T's strength is its integrated network and the CWA workers that keep it operating. "Broadband and wireless don't exist without wireline. That makes building and maintaining the network a critical part of the company's business plan."

CWA and AT&T currently are in contract negotiations for new contracts covering nearly 100,000 workers.

Equinix Revenues Rise 4% in Q1

Equinix's revenue rose to $199.2 million for Q1 2009, a 4% increase over the previous quarter, and a 26% increase over the same quarter last year, including a negative impact due to foreign currency fluctuations of $1.1 million. Recurring revenues, consisting primarily of colocation, interconnection and managed services, were $191.3 million for the first quarter, a 5% increase over the previous quarter, and a 27% increase over the same quarter last year. Non-recurring revenues were $7.9 million in the quarter, consisting primarily of professional services and installation fees.

For the second quarter of 2009, the Company expects revenues to be in the range of $206.0 to $210.0 million. Cash gross margins are expected to range between 63% and 64% and includes incremental costs from expansion IBX centers opening in the quarter.

Capital expenditures in the first quarter were $75.0 million, of which $10.3 million was attributed to ongoing capital expenditures and $64.7 million was attributed to expansion capital expenditures.

Capital expenditures for 2009 are expected to be in the range of $325.0 to $375.0 million, comprised of approximately $60.0 million of ongoing capital expenditures and $265.0 to $315.0 million of expansion capital expenditures. Expansion capital expenditures are for the announced expansions in the Amsterdam, Chicago, Frankfurt, Hong Kong, London, Los Angeles, New York, Paris and Singapore markets.

T-Mobile USA Teams with Echelon to Pursue Smart Grid Opportunity

Echelon is teaming up with T-Mobile USA to accelerate the adoption of the smart grid in the North American market by reducing the communications cost of smart meters. The partnership combines Echelon's Networked Energy Services (NES) system with T-Mobile's GSM cellular network. As part of the agreement, Echelon will utilize an embedded T-Mobile SIM within a cellular radio module to enable all the Echelon smart meters on a given low voltage transformer to communicate back to the utility over the smart grid, and T-Mobile will offer users of Echelon's NES system innovative and cost-effective pricing plans for data usage.

Unlike systems with a dedicated, proprietary radio per metering point, multiple NES meters can share a single IP connection among all the meters on a given low voltage transformer, driving down the per-point connection cost and eliminating the need for the utility to build and maintain a dedicated private wireless network for their meters.

T-Mobile's embedded SIM for Machine-to-Machine (M2M) is approximately the size of a head of a pin and it can withstand challenging environmental factors such as temperature, humidity and motion, according to the company. The embedded SIM preserves many of the benefits of a GSM-based SIM solution (authentication, encryption and storage), but at a fraction the size of the traditional SIM.

"We believe the initiative we have announced today with T-Mobile should fundamentally change the way utilities in North America think about deploying AMI systems," said Jim Andrus, Echelon vice president of NES Sales Americas. "While the investment in coverage, reliability and security of carriers such as T-Mobile is unmatched by what a utility could do on their own, the operating costs of public networks have traditionally limited their use in the North American market. In contrast, aggressive pricing plans have made the use of the public cellular networks as the backhaul of smart grid systems the norm in Europe. We believe the programs we have put in place with T-Mobile can have the same impact on the North American market."http://www.tmobile.com

Fujitsu Microelectronics Launches 1394 Controller for HD Video in Vehicle Networks

Fujitsu Microelectronics America introduced a 1394 Automotive controller that transmits high-definition video over an in-vehicle multimedia network. The new Fujitsu MB88395 controller can simultaneously transmit multiple streams around the vehicle, such as HD video (1,280 dots x 720 lines) from Blu-Ray DVDs, digital TV, and car navigation images. The device uses an 800 Mbps physical layer and link layer, along with the Fujitsu proprietary SmartCODEC, which provides high compression and can transmit HD video without perceptible latency.

"The 1394 Automotive standard is now moving forward for in-vehicle multimedia networking, and we expect it to become the preferred automotive networking standard for entertainment, information, and other applications," said Philip Hughes, senior director, Automotive Business Group, Fujitsu Microelectronics America. "Fujitsu Microelectronics anticipated the need for rear-seat entertainment and has taken a global leadership position in 1394 controller technology. This new device, co-developed with Fujitsu VLSI Limited, allows HD video content to be easily viewed throughout the vehicle. We expect this new 1394 Automotive in-vehicle networking technology will be in vehicles in the 2011 and 2012 model years."http://www.fujitsu.com

PandaLabs: Spam Accounts for 91 Percent of Email Traffic

Less than seven percent of emails that reached companies in the first quarter of 2009 were legitimate correspondence, according to PandaLabs. Some 91 percent of messages were spam, while 1.6 percent, or more than 1.1 million messages, were infected with some type of malware. This data is based on the analysis by TrustLayer Mail, the clean mail managed service from Panda Security, which examined 69 million email messages sent in the first quarter of 2009.

Included below are highlights of recent findings in Q109:

  • Approximately 302,000 computers were newly infected and turned into zombies to redistribute spam.

  • The U.S. remains the leading source of spam during the first quarter of 2009, accounting for 11.6 percent of the total, followed by Brazil (11.5 percent) and Romania (5.8 percent).

  • Spam about various "loans" jumped to the top of the list of top spam topics, with 28% this quarter.

  • Twitter has been heavily targeted by cyber-crooks as a platform for launching phishing attacks. Attackers prey on peoples' curiosity by sending them a direct message telling them that there is a post about them or an image of them on a blog. When users click on the link, they are redirected to a spoof Twitter page. If users enter their Twitter credentials on this page, their data will fall into the hands of cyber-crooks who then use the accounts to send spam.

AT&T Business Solutions Cites Advancements in Q1

During the first quarter 2009, the AT&T Business Solutions entered several new markets, including the AT&T Telepresence Solution and the introduction of a wireless capability to bring smart grid technology to the residential utility market. Earlier this year, the company announced plans to invest approximately $1 billion during 2009 in its global network along with new services and network-based applications.

The AT&T Telepresence Solution allows companies to connect telepresence sessions with their existing H.323 compatible legacy videoconferencing systems, offering a means to leverage historically under-utilized systems. As a result, companies that have made prior investments in video-conferencing technology will now be able to extend the life of their legacy systems. AT&T Business Solutions further announced plans to double the number of Cisco TelePresence rooms deployed at its locations throughout the U.S. and globally.

Also during the quarter, AT&T Business Solutions teamed up with smart grid solutions provider SmartSynch to launch a new suite of service plans for electric utility companies looking to provide the benefits of smart grid technology to the residential sector. The new solution offers utilities a cost-effective, IP-based, point-to-point configuration model in which 'smart meters' communicate directly with the utility over a wireless network. Following that rollout, Texas-New Mexico Power (TNMP) announced it had selected the SmartSynch/AT&T SmartMetersolution for a 10,000 unit point-to-point trial deployment to residential customers throughout the utility's Texas market.

Apple Sells 3.79 Million iPhones in Q1

Apple sold 3.79 million iPhones in Q1 2009,

representing 123 percent unit growth over the year-ago quarter. Over 21 million iPhones have been sold to date. Apple sold 2.22 million Macintosh computers during the quarter, representing a three percent unit decline from the year-ago quarter. The company sold 11.01 million iPods during the quarter, representing three percent unit growth over the year-ago quarter.

Broadcom Announces Bluetooth 3.0 + Wi-Fi Combo Chip

Broadcom's Bluetooth combo chip technology and associated BTE software have been qualified as compliant with the ratified Bluetooth v3.0 + HS (high speed) specification, which supports rates up to 24 Mbps -- a 10X increase in speed over the previous Bluetooth v2.1 + EDR (enhanced data rate) standard.

Broadcom said it is now able to provide a single-chip solution that includes both a qualified Bluetooth v3.0 BR/EDR (basic rate) controller and Wi-Fi CERTIFIED(TM) media access controller (MAC)/physical layer (PHY) device. When combined with Broadcom's v3.0 + HS qualified host software solution, these products enable OEMs to add the convenience of high speed Bluetooth data transfer while reducing board space, power consumption and overall system cost in next generation Bluetooth-enabled devices. http://www.broadcom.com

NETGEAR Revenue Falls to $152 Million in Q1

Netgear reported Q1 net revenue of $152.0 million, compared to $198.2 million in the comparable prior year quarter. Net income (GAAP) was $42,000, or $0.00 per diluted share. This compared to net income of $11.2 million for the first quarter of 2008 and to a net loss of $7.3 million in the fourth quarter of 2008. The company issued second quarter 2009 net revenue guidance in the range of $135 million to $145 million, with non-GAAP operating margin guidance in the range of 3% to 5%.

Patrick Lo, Chairman and Chief Executive Officer of NETGEAR, commented, "In the first quarter of 2009, as expected, we experienced continued weakening in the macroeconomic environment and end market demand. In light of this economic slowdown, we achieved net revenue of $152.0 million, a slight decline from the fourth quarter of 2008, but above our initial guidance of $135 million to $145 million. During the quarter, we experienced stabilization in consumer retail sales and an incremental decline in SMB sales. Product wise, we continued to see a strong market shift to 11n Wifi products. Our net revenue from service providers was approximately 27% of total net revenue, as compared to 18% in the fourth quarter of 2008, and 28% in the first quarter of 2008. We were pleased to add Telkom South Africa to our service provider customer list in the first quarter."

AT&T Reaches 78.2 million Wireless, 1.3 Million U-verse TV Subscribers

Driven by an increasing number of iPhone users, double-digit increases in revenues from IP-based and strategic business services, and further AT&T U-verse TV subscriber gains, AT&T reported Q1 revenue of $30.6 billion, net income attributable of $3.1 billion, diluted earnings per share of $0.53, and cash from operating activities of $7.9 billion. Compared with results for the year-earlier quarter, AT&T's operating expenses for the first quarter of 2009 were $24.8 billion versus $24.8 billion; operating income was $5.7 billion versus $6.0 billion; and AT&T's operating income margin was 18.8 percent, compared with 19.5 percent.

"I am particularly pleased with the success of our iPhone 3G initiative, which has driven strong high-end customer growth and delivered financial benefits ahead of our original outlook. Business and consumer expectations for mobility are on the rise, wireless innovation is flourishing and the opportunities ahead are substantial," stated Randall Stephenson, AT&T chairman and chief executive officer.

Some highlights for the quarter:

  • Postpaid Subscriber Gains. AT&T posted solid organic wireless subscriber gains in the first quarter, driven by a significant step up in retail postpaid net subscriber additions, which were 24.1 percent higher than in the year-earlier quarter. Versus results for the first quarter of 2008, postpaid gross adds totaled 3.0 million, up 9.2 percent; postpaid churn was stable at 1.2 percent; and postpaid net adds totaled 875,000, up from 705,000. This marked AT&T's third consecutive quarter of double-digit year-over-year improvement in postpaid net adds. Total wireless subscribers increased by 1.2 million in the first quarter to reach 78.2 million in service, up 6.9 million over the past year.

  • 38.6 Percent Wireless Data Revenue Growth-- wireless data revenues increased by $884 million, or 38.6 percent, versus the year-earlier first quarter to $3.2 billion. Data represented 27.2 percent of AT&T's first-quarter wireless service revenues, up from 21.5 percent in the year-earlier quarter and 16.0 percent in the first quarter of 2007. Wireless text messages on the AT&T network totaled more than 94 billion in the first quarter, more than double the total for the year-earlier quarter. Internet access and media bundle revenues also continued their solid growth.

  • More Than 1.6 Million Apple iPhone 3G Activations -- In the first quarter, AT&T's iPhone 3G activations totaled more than 1.6 million, more than 40 percent of them for customers who were new to the company. AT&T's U.S. iPhone exclusive continues to deliver subscribers with ARPUs that are approximately 1.6 times higher and churn rates that are significantly lower than the company's overall postpaid subscriber base.

  • Strength in Integrated Devices. In the first quarter, integrated devices accounted for more than 100 percent of the company's postpaid net adds, reflecting strength in new customer sales. Over the past year, the number of integrated devices on AT&T's network more than doubled, and at the end of the first quarter, 31.7 percent of AT&T's 61.0 million postpaid subscribers had integrated devices.

  • 3G -- The number of 3G devices on AT&T's wireless network also more than doubled over the past year, and at the end of the first quarter, 40.8 percent of AT&T's postpaid wireless subscribers had a 3G device, up from 19.5 percent one year earlier.

  • Continued Retail Postpaid Subscriber ARPU Growth. Postpaid data ARPU was $16.48 in the first quarter, up $3.48 or 26.8 percent versus the year-earlier period. Total postpaid ARPU increased 2.1 percent versus the year-earlier first quarter to $59.21. This marked the ninth consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU.

  • 40.9 Percent Wireless OIBDA Service Margin Versus results for the year-earlier first quarter, wireless operating expenses totaled $9.5 billion, up 7.3 percent, and operating income was $3.3 billion, up 13.0 percent. AT&T's wireless operating income margin was 26.0 percent, up from 25.0 percent in the year-earlier quarter and 20.9 percent in the fourth quarter of 2008. AT&T's first-quarter wireless OIBDA service margin was 40.9 percent, compared with 41.7 percent in the year-earlier period, and up 510 basis points from 35.8 percent in the fourth quarter of 2008.

Wireline Operational Highlights

  • U-verse Growth. AT&T U-verse TV subscribers in service increased by 284,000 in the first quarter -- up from 148,000 added in the year-earlier first quarter and 264,000 in the fourth quarter of 2008 -- to reach 1.3 million in service. AT&T U-verse TV continues to reach mid-teens penetration in areas marketed to for at least 18 months, and nearly 50 percent of AT&T U-verse TV subscribers take one of the two largest video packages. AT&T's total video subscribers, which combine the company's U-verse and bundled satellite customers, reached 3.5 million at the end of the first quarter, representing 12.6 percent of households served.

  • Broadband Net Adds AT&T U-verse TV's high broadband attach rate, greater than 90 percent in the first quarter, combined with strong growth in stand-alone broadband bundles to drive a substantial sequential improvement in broadband net adds. Total broadband connections, which include wireline subscribers and wireless customers with 3G LaptopConnect cards, increased by 471,000 in the first quarter to reach 16.7 million in service. AT&T's wired broadband connections increased by 359,000 in the first quarter versus 236,000 in the preceding quarter.

  • Consumer Revenue Connections. Combined, wireline consumer broadband and TV connections increased by 673,000 in the first quarter and 1.7 million over the past year. AT&T had 46.8 million total consumer connections at the end of the first quarter of 2009, compared with 49.3 million at the end of the first quarter of 2008 and 47.0 million at the end of the fourth quarter of 2008.

  • Revenues Per Household. Driven by increased U-verse and broadband penetration, wireline revenues per household were up 2.0 percent versus the year-earlier quarter. This marked AT&T's fifth consecutive quarter of year-over-year growth in consumer wireline revenues per household. Total first-quarter wireline consumer revenues were $5.4 billion, compared with $5.8 billion in the year-earlier quarter, as declining voice revenues more than offset growth in video and broadband.

  • 16.4 Percent Growth in Wireline IP Data Revenues. AT&T posted its sixth consecutive quarter of mid-teens growth in total wireline IP data revenues, driven by expansion in AT&T U-verse services and growth in business products such as VPNs and managed Internet services. Consumer IP data revenues, from AT&T U-verse and broadband services, grew 23.0 percent, and business IP data revenues grew 10.5 percent. IP services now account for 46.8 percent of AT&T's total wireline data revenues, up from 42.3 percent in the year-earlier first quarter and 37.9 percent in the first quarter of 2007.

  • 19.6 Percent Business Strategic Revenue Growth. Revenues from the new-generation capabilities that lead AT&T's most advanced solutions -- including Ethernet, VPNs, hosting, IP conferencing and applications services -- grew 19.6 percent year over year, continuing strong trends for this category over recent quarters. Progress in these product areas reflects the strength of AT&T's network and its advanced product sets for business customers. Total first-quarter wireline business revenues -- which include results from enterprise, wholesale, government, education, medical and small/midsize customers -- were $10.7 billion versus $11.2 billion in the year-earlier quarter, reflecting economic impacts on both retail and wholesale customers, primarily from voice products and CPE.