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Nortel Sells UMTS Unit

Mark Evans — Fri, 01 Sep 2006 06:33:39 -0400

Nortel has agreed to sell its UMTS unit to - surprise, surprise - Alcatel for $320-million. It was only a matter of time before Nortel sold the money-losing business, and Alcatel seemed to be the most logical buyer. While Nortel can certainly use the $320-million, it is below the expectations of analysts, who were looking for about $500-million. Nortel held a conference call today at 9 a.m. to provide an “update on advances to the execution of its business plan”. According to analysts, Nortel's UMTS access business was losing about $200-million a year on sales of $400-million to $500-million. No wonder Nortel wanted out so badly. With UMTS out of the way, Nortel CEO Mike Zafirovski can now focus on other parts of the business that don't meet his 20% market share benchmark. At the end of the day, Nortel will be a smaller player but, hopefully, profitable.
Update: For more views on Nortel, check out All Nortel, All the Time.

Cisco's VOD Play

Mark Evans — Tue, 22 Aug 2006 07:49:57 -0400

Now that Cisco is sexy again (stellar fourth-quarter results, strong growth projections for fiscal 2007, the savvy acquisition of Scientific-Atlanta), tech/TV watchers should pay attention to its latest acquisition: the $92-million purchase of Arroyo Video Solutions, which makes software to help cablecos and carriers deliver video-on-demand services. The acquisition is the latest in a string of video-related deals that Cisco has made in recent years (perhaps Linksys could be included given it expand video within the home) to reposition itself at a time when many of its rivals (Nortel, etc.) are scrambling to figure out where they want to be and what they will look like in the wake of fierce competition. Cisco, meanwhile, is far ahead of the pack with a strategy that may become CEO John Chamber's legacy. Watch this space, watch this company. For more, check out GigaOm.

Verizon Pushes Forward With FTTH

Mark Evans — Mon, 14 Aug 2006 14:17:40 -0400

The New York Times has an enlightening story today looking at how Verizon plans to spend $20-billion to deliver fiber-optic connectivity to residential households. Why? Well, Verizon believes it has no choice if it wants to deliver the same kind of bandwidth-hungry services (high-definition television, video-on-demand, etc.) as cable rivals such as Comcast and Time-Warner. It's a huge investment and a strategic gamble but many carriers have no choice if they want to compete on a level playing field with their cable rivals, which have been happily signing up hundreds of thousands of new home phone customers from carriers in recent years. It is interesting that while Verizon aggressively pushes forward with fiber-to-the-home, Canadian carriers Bell Canada and Telus Corp. are betting on fiber-to-the-node This means they are pushing fiber close to households, and then hoping compression technology can give the big, fat pipe over the "last mile". Will this strategy pay off? Well, only time will tell but the strong growth of Canadian cablecos such as Rogers, Videotron and Shaw recently is a troubling development for Bell and Telus. One thing I do find fascinating about the carrier-cable battle is how the cable industry has used CableLabs to support its efforts. For those unfamiliar with CableLabs, it's a non-profit R&D consortium that develops innovative products and standards for its members. You would think the carriers would have - or should have - something similar to effectively fight back. Instead, the carriers rely on cash-strapped telecom equipment suppliers for new products and services, while arguably not spending nearly enough on their own R&D. For more on FTTH, check out Information Week, which writes about the technology's strong growth, albeit from a small base.

JDS' Jozef Straus Back on the Scene

Mark Evans — Thu, 10 Aug 2006 07:12:33 -0400

Jozef Straus, who became a poster boy during the telecom boom for the rise (and fall) of JDS Uniphase, has popped back into the telecom spotlight as a strategic advisor to Enablence Technologies Inc. The beret-wearing Straus has kept a low profile since he retired in 2003 with US$150-million - most of it through exercising options when JDS was riding high. Meanwhile, JDS has gone through some tough times: the stock crumbled, sales tumbled and the fiber-optic company's operations in Ottawa shrank from more than 10,000 workers to a few hundred. Enablence is a start-up developing a chip that will reside inside an optical modem to provide high-speed connectivity of 1.2Gbps to households. My story on Straus and Enablence in today's Financial Post can be found here.

Digium Raises $13.8M

Mark Evans — Wed, 09 Aug 2006 20:19:53 -0400

Digium CEO Mark Spencer has spent a lot of time over the past few years politely turning aside the advances of VCs but he has finally caved in by taking $13.8-million from Matrix Partners. For open-source supporters, it's another sign the "movement" has gone legit. Of course, Red Hat buying JBoss for $420-million earlier this year was a pretty good sign that open source was entering the mainstream. So why did Spencer, who I once described as the Linus Torvalds of IP-PBX, taking the cash? Well, it's not exactly clear because he says Digium, which oversees development of Asterisk and sells related hardware and services, doesn't really need it. In talking with Spencer, it sounds like he's aware of the growing competition from small and larger rivals, and wants to make sure Digium has the cash it needs to strategically respond. "This is really about trying to make sure we do the right things going forward," he said. "When you start out, there is a lot of room when you are making a new industry to make some mistakes and get away with it. As you get farther along and get people on your tail and paying attention to what you are doing, you have a lot less room, and we need to make sure we preserve a lot of the things we have done that are good." Spencer said the deal with Matrix, which financed JBoss, is not a traditional VC arrangement. While declining to provide a lot of details, he said it "preserves the spirit of the company and leave the company in control" - nice terms if you can get them. Of course, Digium had some clout given it's been profitable since 2002 and growing revenue by 100% a year.
Note: For more, check Red Herring and BusinessWeek.

Redback's Aggressive Growth Plans

Mark Evans — Wed, 09 Aug 2006 07:21:26 -0400

The telecom equipment market is under siege - at least in this part of the world where Nortel is trying to slowly restructuring itself back to health. So it is seems, well, strange to hear Redback Networks's ambitious plans to double its workforce to 1,200 from 600 over the next year. In an interview, Mimi Gigoux, who heads up worldwide human resources for Redback, said the company is looking to hire in Canada and the U.S., rather than going off-shore to low-cost regions such as China and India. So what's behind the bullish hiring plans? Redback believes the "explosion" of Web-based services such as IP-TV, VOD and VoIP means huge demand for its edge-routers - a market where the competition includes heavyweights such as Cisco, Juniper and Alcatel. An interesting comment by Redback is their belief the telecolm equipment market is dividing itself between the large players, who are becoming system integrators, and smaller, niche players focused on specific types of technologies. Investors appear to have not picked up on Redback's optimism as the stock has dropped 40% in the past three months.
Update: Speaking of bullish, Cisco CEO John Chambers provided an enthusiastic outlook for the company's fiscal 2007 prospects yesterday with an expectation of 15% to 20% revenue growth. "We are gaining market share against nearly all our peers in the service provider segment," he said during a conference call after Cisco posted better than expected fiscal fourth-quarter results.

Nortel: When a Profit is Not a Profit

Mark Evans — Thu, 03 Aug 2006 07:45:40 -0400

Nortel posted second-quarter earnings of $366-million this morning, or 8 cents a share (compared with analyst estimates of about 2 cents). Before investors get too excited and storm off to jump on the bandwagon again, the bottom line was nowhere as good as it appears. For one, profits were buoyed by a $510-million gain from shareholder litigation recovery. After accounting for charges related to restructuring and asset sales, Nortel lost about $89-million in the quarter, or about 2 cents a share. Another sign Nortel has yet to recover is a sharp decline in gross margins to 39% from 43%. However, Nortel remains confident the rest of the year will be more promising. CFO Peter Currie said the company exepcts strong sales momentum, high single-digit growth compared with 2005, gross margins of 40%, and operating expenses to be flat to slightly up.

Convedia Snapped Up for $105M

Mark Evans — Thu, 27 Jul 2006 22:01:15 -0400

Boy, the folks south of the border sure like our tech companies. This time around it's Burnaby, B.C.-based Convedia Inc., which has been acquired by RadiSys Corp. for US$105-million. It's a sweet return for Convedia's investors, which includes Ventures West, Mayfield Ventures and Terry Matthews' Wesley Clover. Convedia makes media servers for telecom carriers and enterprise customers that want to offer VoIP and IMS services. Convedia, which had has won a ton of industry awards recently, was on a revenue run-rate of $20-million based on its second-quarter results. The RadiSys press release can be found here.

Mysterious Broadband Start-Up Raises More $$

Mark Evans — Tue, 25 Jul 2006 07:36:22 -0400

Nothing like a good summer mystery, right? Zeugma Systems has raised another $2.25-million to close its first financing round at a sweet $15.75-million. So what's the Vancouver-based start-up going to do with the cash? Well, they're not telling. In fact, they're not even disclosing what they're working on other than a system, which won't be ready for at least another year, for "next-generation broadband networks" that will be used to TV, video and VoIP. The latest cash injection came from BDC Ventures (aka the Canadian government), Zeugma executives and staff. Existing investors include Granite Ventures, Ventures West, Yaletown Venture Partners and GrowthWorks Capital. Zeugma expects to raise another round of private equity later this year. Zeugma's press release can be found here.
Update: Zeugma was recently named as one of LightReading.com's top 10 start-ups.

Another Telecom Domino Drops: Nokia-Siemens Unite

Mark Evans — Mon, 19 Jun 2006 07:25:56 -0400

If there wasn't enough consolidation pressure within the telecom equipment industry, a mega-deal between Nokia and Siemens will likely up the ante. In a deal that will create a $19.9-billion entity creatively called Nokia-Siemens Networks, Nokia will combine its network business unit with Siemens' carrier business. The new company, which comes in the wake of Alcatel's acquisition of Lucent, will have 60,000 employees but expects to shed 6,000 to 9,000 positions over the next four years.
Perhaps one of the biggest questions now is what happens to Nortel, which had been rumoured to be exploring a deal with Siemens while there had also been active speculation about a deal (described by Scotia Capital Markets analyst Gus Papageorgiou as "Norkia") with Nokia. Did Nortel CEO Mike Zafirovski get out-maneuvered or simply left sitting on the sidelines while two other players decided to dance? So what does Nortel do now? Maybe it goes after Siemens' enterprise business given Zafirovski is intent on Nortel playing in the market against rivals such as Cisco. Or perhaps Zafirovski will go after some kind of deal with Cisco or Juniper? Or does Nortel try to stay independent (if that's possible) until its makeover is done?
As for why consolidation is happening, there are a few key factors: competition is brutal so profit margins have been savaged even as overall sales have rebounded. As a result, equipment makers have no choice but to slash costs. (Nokia and Siemens figure they will save $1.9-billion a year). Another factor is competition from low-cost suppliers such as Huawei and ZTE that can aggressively bid for contracts. To make matters worse, you've got large customers such as SBC and AT&T getting together to shrink the number of equipment buyers.
Update: For other takes on the Nokia-Siemens deal, check out Mathew Ingram, Om Malik and IP Democracy.

The Chronicles of Norkia

Mark Evans — Fri, 26 May 2006 09:53:14 -0400

Norkia.
Curious about a combination of Nokia and Nortel? For more, click here but don't click on Norkia.com unless you need a tool to kill pop-up ads.

Mitel: IPO Deja Vu

Mark Evans — Thu, 11 May 2006 08:07:10 -0400

For the second time in 27 years, Terry Matthews is taking Mitel public. This time around, the company is apparently looking to raise $150-million for "general corporate purposes". While Matthews is well-respected as Canada's leading telecom entrepreneur, it is important that potential Mitel investors realize the Ottawa-based company is posting large losses as it pours money into R&D,sales and marketing to compete with heavyweights such as Cisco, Avaya and Nortel in the IP communications market. For history buffs, Mitel originally went public in 1979 after it was started six years earlier by Matthews and Michael Cowpland, who later went on to start Corel Corp.

Jozef Straus' Underwhelming Legacy

Mark Evans — Thu, 11 May 2006 07:33:30 -0400

At the height of the telecom boom, JDS Uniphase was the toast of the Canadian high-tech scene with more than 10,000 employees in Ottawa. Meanwhile, its beret-wearing CEO Jozef Straus became the man of the moment - rocketing from a-little known telecom executive to magazine cover-boy. Then, the telecom boom came to an end, JDS moved its corporate headquarters to San Jose, and the company started to lay off thousands of employees, including most of its workforce in Ottawa. Straus, however, was savvy enough to walk away from JDS with more than $150-million - most of them from exercising stock options before retiring in 2003.
Perhaps the final chapter of JDS' sad story in Ottawa is news the federal government is about to sign a 25-year, $600-million lease for a new headquarters for the RCMP. When the lease expires, the government can buy the state-of-the-art complex for $1 from Minto Development, which purchased the complex a few years ago for $30-million. Does it seem perculiar to anyone that Straus is still well-regarded with Ottawa's high-tech community when, at the end of the day, there's almost nothing left of JDS? Isn't entrepreneurial success (at one important aspect) the creation of something tangible that benefits from community? Sure, JDS created a few millionaires if you were smart enough to sell at the right time but that's about it. At least the RCMP will be happy when they move into their new digs, which features a gourmet kitchen, 300-seat auditorium and gym.

The Nortel Two-Step

Mark Evans — Sun, 30 Apr 2006 08:52:11 -0400

Sometimes you wonder if Nortel can't win for trying. The company finally manages to convince itself its 2005 financial results are ready for public consumption (a positive development), then it goes and releases them late in the day on Friday after everyone's headed home for the weekend. (a negative development). From an optics perspective, it gives the impression that Nortel is trying to hide something because the only reason to issue a major press release late in the day on a Friday is if you want to avoid attention from investors and the media. Of course, Nortel will likely claim it received SEC clearance and/or that its paper work was completed Friday afternoon so it had no choice but to follow disclosure rules and release the financial results. Maybe this is true but this isn't the first time Nortel has utilized the Friday afternoon "trick" to release financial news. If Nortel - and CEO Mike Zafirovski - are at all interested in regaining the confidence of investors and analysts, they need to try to appear as if they are being as straightforward and transparent as possible. Issuing a press release to disclose financial results that should have come out a few months ago is not the way to do it.

Alcatel-Lucent Tie the Knot. Really!

Mark Evans — Sun, 02 Apr 2006 13:15:01 -0400

The speculation is over: Alcatel and Lucent have officially merged (unofficially Alcatel is buying Lucent given its shareholders will have 60% of the new entity) to create a $25-billion wireline, wireless and services behemoth. It is interesting that Alcatel is purchasing Lucent at a discount to Friday's closing price. Patricia Russo will become CEO while Serge Tchuruk will be non-executive chairman. AlcaCent also plans to eliminate 8,800 jobs, or 10% of the workforce, to reduce annual costs by $1.7-billion. So can we now launch the consolidation frenzy within the $336-billion equipment industry? How long before Siemens or Nokia pursue Nortel, or Huawei takes a run at Juniper or as Om Malik suggests will Juniper take a run at Huawei? For several years, the telecom equipment market has been waiting - desperately needing? - consoliation among the large players amid fierce competition, soft margins and a dwindling customer base. Perhaps fewer players is what's needed to restore some sense of fiscal health. That said, there is some healthy skepticism emerging. RBC World Markets' analyst Mark Sue said Lucent and Alcatel have distinctly different corporate cultures and any expected synergies will likely not emerge for a year. IP Democracy also has concerns about the French ownership of Lucent's Bell Labs operation, which does work for the U.S. government and security agencies.

Is Alcatel-Lucent Just the Beginning?

Mark Evans — Fri, 24 Mar 2006 07:10:03 -0500

So, Alcatel and Lucent are thinking about doing a $34-billion merger? While they will only admit to be "discussions", a deal could have huge ramifications on the telecom equipment landscape. Nortel, for example, would find itself with a formidable competitor in "Alcacent" and the speculation about Nortel doing a dealing itself - possibly with Siemens - could intensify. The Alcatel-Lucent deal, which has been rumoured before, is the kind of transaction the telecom equipment industy has expecting for the past several years because it is widely believed the market has to consolidate. So far, however, everyone has been afraid to make the big leap. That said, there have a series of joint ventures (Nortel-Huawei, for example) established, which suggests there's a lot of dating happening but everyone is still commitment-phobic and refuses to get married.
Update: The Networking Stock Blog has a nice round-up of buzz within the blogospher of the Alcatel-Lucent talks, while Om Malik provides an in-depth analysis of why the deal makes sense, and Mark Goldberg looks at how the consolidation within the telecom equipment would impact R&D activity in Canada.

Rumour du Jour: Ericsson Buying Juniper

Mark Evans — Wed, 15 Mar 2006 15:57:37 -0500

Is Ericsson willing to spend $11-billion (not including a takeover premium) for Juniper Networks? Apparently, there is speculation the Swedish company is interesting in the IP router maker, even though it would an all-stock deal would be highly dulitive and complicated by Juniper's partnerships with Lucent and Siemens, which account for 20% of its sales. If the deal actually materialized, you wonder if it would trigger the long-awaited consolidating within the telecom equipment market among the major players. Perhaps a Cisco-Nortel or a Nortel-Siemens or an Alcatel-Lucent?

What AT&T Breakup?

Mark Evans — Sun, 05 Mar 2006 08:21:48 -0500

The telecom industry sure moves in strange and mysterious ways in light of the Wall St. Journal report that AT&T will unveil the purchase of BellSouth for $65-billion. It was only 22 years ago, that the old AT&T was split into seven "Baby Bells" in wake of the Department of Justice's anti-trust suit. You can't help but ask what the AT&T break-up exercise was really all about now that Humpty Dumpty has been put back together again. If this mega-deal - a foregone conclusion says Om Malik - is completed, you'll essentially have AT&T and Verizon as the last guys standing what with AT&T/SBC having snapped up Ameritech, Southwest Bell, Pacific Telesis Group and BellSouth, while Verizon acquired Bell Atlantic and NYNEX. (Qwest bought U.S. West). So what does it mean from a competitive standpoint? It certainly sets the stage for an even more consolidation in the industry as Qwest could become the next (and last) big carrier to fall. It will also create an even more fierce carrier-cable war as they wage the "Battle of the Bundle" for consumers. Perhaps it will prompt some consolidation in the cable industry if some cablecos start to believe they need to become even bigger to compete effectively with the carriers. The deal will also have an impact on the already-fragile telecom equipment market as yet another large customer gets taken out of the picture. And another angle to the deal is it will allow AT&T CEO Ed Whitacre and BellSouth CFO William Smith to continue their crusade against Net Neutrality in an even more united way. At the end of the day, the question is whether the deal is good for the U.S. telecom sector. Will it allow carriers (well, at least Verizon and AT&T) to become more efficient and competitive with cable rivals? Will this be good for residential and business consumers? Only time will tell.
From a Canadian perspective, telecom consolidation has also been in progress with several carriers (Sprint Canada, GT Telecom, 360 Networks) acquired in recent years. The question is whether there's an indepedent future for small carriers such as Manitoba Telecom Services and SaskTel? Will the market eventually be BCE, Telus and a handful of small, rural exchanges?
Update: IP Democracy highlights the combined access and DSL lines of AT&T and BellSouth, and wonders if this is what the federal government had in mind with the 1996 Telecom Act.

JDS's Canadian Presence Shrinking Fast

Mark Evans — Wed, 15 Feb 2006 15:50:35 -0500

At the height of the telecom boom, JDS Uniphase had more than 10,000 employees in Ottawa - a.k.a. Silicon Valley North - but now the company is but a mere shadow of its former self. Earlier this week, the company - which insists on calling itself JDSU these days - sold its manufacturing business in Ottawa to Fabrinet. This will reduce JDS's workforce in Ottawa to 350 from 650. While JDS's shrinking profile in Ottawa has been well-documented, the manufacturing facility sale just hammers home the company's lack of any kind of legacy in Canada. JDS was a high-tech success story nurtured and grown in this country. At the end of the day, there's little left. Perhaps the only person to do well from JDS's riches to rags story is former CEO Josef Straus, who walked away with millions and millions and millions of dollars, and for whatever reason, is still held in high esteem within the Ottawa high-tech community.

Ericsson Scores $330M Wireless Deal With Rogers

Mark Evans — Mon, 13 Feb 2006 13:38:01 -0500

As the wireless data market gains momentum, Rogers is quickly moving to implement HSPDA technology, which offers speeds 1.5 to two times faster than EVDO networks. Rogers has tapped Ericsson as its exclusive supplier - a contract worth as much as $330-million. While Ericsson and Rogers have had a long relationship, the contract illustrates Ericsson's strength in the GSM market. Rogers plans to start deployment of HSDPA technology later this year as it moves to generate more revenue from data. To date, Rogers gets about 10% of total revenue from data services such as Blackberry devices, ringtones, short-text messaging and games. The pot of rainbow at the end of the rainbow - as far as many carriers are concerned - is video based on the belief consumers will purchase video clips of sports, music and news to watch on their wireless devices.
Tags: wireless, HSDPA, Ericsson

Nortel Brand-Building Again

Mark Evans — Thu, 02 Feb 2006 17:36:29 -0500

After sitting on the sidelines for a couple years, Nortel is back in the branding business with print and television ads that will feature the slogan "Business Made Simple". It's an improvement over the last, quickly-forgettable campaign, which used "This Is The Way". I wonder if this is the work of Clent Richardson, who will be leaving his position as Nortel's chief marketing officer next month? Maybe Nortel CEO Mike Z. is pushing the exercise as a way to refresh Nortel's brand and mark the start of his reign? Personally, I would have gone with "JVs are Us" in light of Nortel's deals with Huawei and LG. Or maybe the catchier "It's Mike Zee, Not Mike Zed, eh" to reflect one of the differences between Canadians and Americans. Or maybe the simpler "The New Nortel: Slim, Trim and Scandal-free".

SR Telecom Goes on Share Spree

Mark Evans — Thu, 02 Feb 2006 14:25:08 -0500

First, the good news: Montreal-based SR Telecom Inc. has raised C$50-million from a private placement to support its fixed wireless growth strategy. The bad news is if you're an existing shareholder is SR has issued a whopping 333 million common shares and converted $58-million of convertible debentures into another 280 million shares. So while the company has less debt, the number of outstanding shares has soared to a Nortel-like 680 million. -

Analysts Loving Nortel's Mike Z.

Mark Evans — Fri, 27 Jan 2006 10:03:56 -0500

I've got an investment story in today's National Post about how a growing number of analysts are jumping on the Nortel bandwagon. A big chunk of the enthusiasm has to do with the expectations newly-minted CEO Mike Zafirovski and his plan to revive the embattled company by giving it a sharper strategic vision - as opposed to its all-things-to-all-people approach that spread its focus (and R&D dollars) too thin. While Zafirovski is a breath of fresh air after John Roth, Frank Dunn and Bill Owens but investors should be cautious before they start to believe Nortel's back on the right track. This is a company with a multitude of internal challenges that will time to fix, while it faces external issues such as rising competition from low-cost rivals such as Huawei and low margins in high-growth markets such as India and China. It would probably make sense to wait until Nortel issues its fourth-quarter results in a couple weeks before getting too excited about Nortel's prospects, particularly given it should be the first time Mike Z. will talk publicly since he started the new gig in mid-November.

Canuck Gets Big Promotion at Cisco

Mark Evans — Thu, 19 Jan 2006 15:53:01 -0500

Canadian-born James Richardson has been given a major promotion at Cisco with his appointment as senior vice-president of commercial business (a newly-created position), which focuses on the fast-growing small and medium-size businesses - a market which Cisco sees as its most significant growth opportunity over the next three to five years. Richardson had been Cisco's chief marketing officer for the past four years. The 16-year Cisco veteran will be succeeded as CMO by Susan Bostrom.
Update: Light Reading takes a look at the tenuous nature of being a CMO for a telecom equipment maker.

BTI Phototonic Raises $12.25M

Mark Evans — Fri, 06 Jan 2006 13:33:35 -0500

BTI Photonic Systems, which makes metro optical edge equipment, has raised $12.25M to expand the business. It's another sign there are signs of life within Ottawa's telecom equipment market given Meriton Networks' $54-million private equity exercise and Meriton's purchase of Mahi Networks.

Nortel Buys a Router Maker

Mark Evans — Tue, 27 Dec 2005 14:21:41 -0500

Well, what do you know? Nortel has made an acquisition. In fact, it has bought a company that actually makes telecom equipment as opposed to a second-tier system integrator (PEC Solutions) that caters to a single vertical - the U.S. government. Nope, not this time. Nortel is spending $99.5-million for Tasman Networks, which makes IP routers for corporate customers. Without providing instant-analysis on whether the deal makes sense (I mean, do you really want to go head-to-head in the router market with Cisco and Juniper?), it is definitely encouraging to see Nortel finally make a strategic technology acquisition. You have to remember this is a company that has sat on the M&A sidelines for several years (excluding PEC, which gobbled up $448-million of cash earlier this year) as it grappled with an accounting scandal and a new CEO focused on what he knew best - the U.S. government, U.S. military and security. At a time when Nortel is trying to reduce spending and make its R&D more "efficient", the lack of strategic deals was puzzling when rivals such as Cisco, Lucent and Alcatel were buying cool start-ups. This is just another sign that new Mike Zafirovski is wasting no time putting his stamp on the company. It's also a sign Nortel's partnership with struggling router maker Avici is probably doomed. Tasman's investors include Harbinger, Mayfield Funds, New Enterprise Associates, Parker Price Venture Capital. However, according to Light Reading, the deal isn't a "home run" given Tasman raised $93 million in venture capital and went through several make-overs.
Update: The Motley Fool's Rich Smith thinks the Tasman deal is worth scrutinizing given the company has less than $10-million in sales, and Nortel is valuing it at 12.3 times sales.

Tropic Networks' Odd Survival Plan

Mark Evans — Wed, 14 Dec 2005 10:10:12 -0500

Is the venture capital environment still struggling or is the telecom sector still unattractive to investors? These are questions that begged to be asked in the wake of Tropic Networks' unorthodox financing plans. The Ottawa-based optical networking equipment maker hopes to hang on for another nine months by spinning off its technology assets and business into a new entity called NewCo. Tropic Networks - a.k.a. OldCo, I guess - will then refocus its business on the oil and gas sector by acquiring acquired two oil and gas companies (yes, that's oil and gas companies). Tropic will acquire oil developer Chamaleo Exploration and Tournament Energy. natural gas developer Tournament Energy for common and preferred shares. The deal will give NewCo/ Tropic $8.1-million in cash, which should let it survive another nine months while giving it time to hunt down other sources of financing. To be honest, I've never heard of a telecom company getting into bed with an energy producer but we live in strange times. One thing that puzzles me about Tropic's financing plan is the optical market appears to be making a mini-comeback, particularly in the metro market, so you would think there would be some interest in the company. Tropic, which values its current assets at $36 million, raised $33-million of private equity in July 2004 from a group of investors that included Alcatel, Celtic House, Crescendo Ventures, Goldman Sacks, Kodiask Ventures and Teachers' Private Capital. This raised its total fund-raising activity to $120-million.

Chambers Naturally Bullish on Web Traffic

Mark Evans — Tue, 06 Dec 2005 14:26:24 -0500

I'm having a terrible 1970s flashback to Rachel Stevens' hit song "More, More, More" after hearing John Chambers' aggressive view on the Internet. Speaking to analysts this morning, the Cisco CEO said he expects Internet traffic to grow 300% to 500% a year over the next decade. That's astounding given growth has been about 100% in recent years. Not surprisingly, the biggest driver will be video as Internet-based services such as IP-TV, video-on-demand and mobile TV become more popular. Cisco, of course, stands to benefit from this explosive growth as the need for routers and switches within networks will likely surge, as well devices within the home (routers, set-top boxes, etc.) to handle more traffic after it leaves the "last mile". Chambers could be in ultra-sales mode and/or he could simply be discussing what he sees on the horizon. Even he's half right, the growth in traffic will be amazing. With all the talk about Web 2.0, I think it might be time to start talking about Telecom 2.0 - a phrase and idea introduced to me recently by a cable executive. This is world where IP-based services (video, data, audio) are delivered over networks to consumers when they want them, how they want them and where they want them. I think we're just beginning to search the tip of the iceberg with Apple's deals with ABC and NBC to deliver television shows to the iPod. If you step back, what this represents is the delivery of video to a mobile video device that uses Internet to deliver it. It won't be long before consumers will come to expect to receive this kind of service delivery anywhere, any time. This will dramatically change how the telecom, cable and media industries operate - hence the term "Telecom 2.0." Any thoughts?

Tuesday A..M. Bytes: Online Ads, Cisco, Canadian Web 2.0

Mark Evans — Tue, 22 Nov 2005 07:41:58 -0500

Online Ads Rockin': As if Google shares needed any more support, the online advertising market in the third-quarter climbed to $3.1-billion - a 34% jump from a year earlier and a 5% increase from the second-quarter. It's also the first time the market topped $3-billion in a quarter. While Google dominates the spotlight with its AdWords and AdSense programs, it is important to note the market is also being propelled by the growing presence of large players such as Proctor & Gamble, which are allocating more of their budgets to the Internet.

Cisco Makes a Deal: Cisco unveiled another acquisition, albeit nowhere near the size of the $6.9 billion deal for Scientific-Atlanta. To enhance its "add, move and change" technology, Cisco bought some intellectual property and other assets from Toronto-based Digital Fairway Corp. for $15.2 million. The technology will be a key part of Cisco's new IP Communications Provisioning Manager that will come out next year.

Canadian Web 2.0?: Michael McDerment is looking to compile a list of Canadian Web 2.0 innovators and entreprenuers. Do we have any up Web 2.0 types up here or are we missing the boat?

Cisco Moves Into the Digital Home

Mark Evans — Fri, 18 Nov 2005 11:27:49 -0500

So whatever happened to Cisco's traditional M&A strategy of buying technology as opposed to big companies where resolving cultural differences can make acquisitions difficult? It seems like this approach has been thrown out the door as Cisco is buying Scientific-Atlanta for $6.9 billion (it's really $5.3 billion given SA has $1.6 billion of cash). Whether or not this move is seen as unorthodox, it's brilliant because Cisco now has a major and leading presence in the digital household, which is poised to take off as high-speed Internet networks make it easy for carriers and cablecos deliver all kinds of new services. Let's be clear here, Linksys was a nice business but selling routers in a competitive market is far from earth-shattering. On the other hand, SA is poised to become the gateway to the digital home. The "big pipe" that comes into the home will, in many cases, be connected to SA's set-top box, which means Cisco will play a key role in how new services are delivered. In particular, SA will give Cisco a crucial role in the video business, which is booming as cablecos upgrade their networks to implement VOD and PVRs while telcos scramble to launch IP-TV.

Some More BSNL, Nortel?

Mark Evans — Tue, 08 Nov 2005 16:31:54 -0500

So, Bharat Sanchar Nigam Ltd. (BSNL) is looking buy another $4.5-billion of telecom equipment as it drives to add 60 million new wireless subscribers. The question facing Nortel is whether it is interested in bidding for a piece of the action and, if so, how much? Nortel could be a little gun-shy given it is losing buckets of money on a $500-million contract it signed with BSNL last year. So far, Nortel has posted a $266-million loss on sales of $228-million. Now, that's what a loss-leader! It would be a shocker if Nortel isn't interested in some BSNL business but you wonder how much of an appetite it or any other equipment supplier has for contracts with low or razor-thin margins. Does it make sense to win this kind of business just to gain a foothold in a fast-growing market? If you can't make money, it doesn't really matter, right? This was a bone of contention between outgoing Nortel CEO Bill Owens and ex-COO Gary Daichendt: Owens wanted a bigger presence in India while Daichendt believe it was just bad business. Mike Zafirovski, who succeeds Owens next week, will have a tough decision to make as he works to focus Nortel's operations. To India or not to India, that is the question.

Chinese Carriers Cutting Back

Mark Evans — Wed, 02 Nov 2005 22:29:39 -0500

For telecom equipment makers (Alcatel, Nortel, Lucent?) who have pinned their hopes on China, they would be wise to not ignore opportunities closer to home. A report by Infonetics suggests capital spending in China will decline 3% in 2006, mostly due to a slow down in the wake of massive build-outs. "The capital intensity for Chinese carriers was over 30%, which is an unsustainable ratio," said Kevin Mitchell, a principle analyst with Infonetics. Meanwhile, capex in North America, Europe and Asia Pacific will grow 6% this year to $190 billion with similar growth expected in 2006. Most of the spending gains are focused on investments in next-generation technologies such as packet voice, broadband and metro Ethernet. A telling tale of the economic reality of breaking into new markets is Nortel's $500 million deal with BSNL. In theory, it is supposed to give Nortel a foothold in the fast-growing Indian market. To date, however, it has only given Nortel plenty of pain and red ink as losses have totaled $286 million on sales of $226 million. Even worse, it appears BSNL has an option to buy another $250 million of wireless equipment, which could mean even more losses for Nortel.

Cisco's Giancarlo on Industry Consolidation

Mark Evans — Wed, 26 Oct 2005 11:13:16 -0400

I had a chat yesterday with Cisco chief development officer Charlie Giancarlo, who talked about a variety of topics, including the recent unveiling of technology to link emergency services radios in a more cost-efficient way. With the $2-billion Ericsson-Marconi deal unveiled earlier in the day, I asked Giancarlo if this is an indication of much-needed industry consolidation among the larger equipment suppliers. Here's what he had to say:
"I don't think it's yet a sign of consolidation. We do need consolidation in the vendor business but Marconi has not been part of the tier-one environment. The industry, as you know, especially in the optical space, is over competetive at the moment. There are very few players that are profitable - Cisco in one, Juniper is another and others are only moderately profitable, and there probably needs to be greater consolidation."
Given Cisco's modus operandi, do not expect it to be the major industry consolidator. Instead, it will continue to make small but strategic acquisitions. If anyone's going to make a big move, look to Alcatel, Siemens or Nokia. There has been scuttlebutt about Alcatel buying Lucent and Nokia and Siemens looking at Nortel. I think a Nortel deal is unlikely - unless it receives a blow-away offer, what with Mike Zafirovski coming in as CEO next month. The board will likely give him a chance to execute a turnaround before it thinks of entertaining takeover offers. A good clue of Nortel's plans could be Zafirovski's compensation package, which includes five million restricted stock units and five million stock options. This suggests he needs some time to improve operations so Nortel's stock can rebound and make his package even more lucrative.

Zafirovski's Pay Package

Mark Evans — Sat, 22 Oct 2005 08:22:52 -0400

So now we know what it costs to attract a world-class telecom CEO after Nortel disclosed its compensation package for Mike Zafirovski. At first blush, it doesn't look too bad: a base salary of $1.2 million a year with the opportunity to make an annual bonus of $3.6-million. Of course, it helps to have five million restricted stock units currently worth $7.5 million and five million stock options that could be worth a cool $10 million if Zafirovski can bump up Nortel's anemic stock by a couple dollars over the next few years. According to a statement by Nortel yesterday, discussions are taking place between Nortel, Motorola and Zafirovski about resolving that pesky lawsuit launched by Motorola earlier this week that alleges Mr. Z. is breaching non-compete clauses by becoming Nortel's CEO. I suspect this "problem" will be worked out in a few weeks. Look for Zafirovski to return $11-million of $16.8-million severance package he was given in January by Motorola, and agree to several restrictions such as not going after former colleagues. Don't be surprised to see Nortel "compensate" Mike Z with a "special bonus" that will make up for the $11 million he'll hand back to Motorola.
Bottom line: Nortel knew what it was getting into when it agreed to hire Zafirovski, and if it takes a few million dollars to make it happen so be it. If Zafirovski can revive Nortel's business and stock, few people will complain about his compensation package.
Update: For an interesting behind-the-scenes read about Mike Z's hiring, including some fascinating details about Zafirovski speaking with Motorola CEO Ed Zander after accepting the Nortel gig, you should check out James Bagnell's story in the Ottawa Citizen.

Cisco-Skype Strike a Pose; eBay Makes Another (Better) Deal

Mark Evans — Wed, 12 Oct 2005 07:43:35 -0400

Cisco and Skype are joining forces to sell a new Skype-enabled phone. Cisco's $129.99 CIT200, manufactured by Richmond, B.C.-based Ascalade Communications, will be available Oct. 17.
(PriceWaterhouseCoopers has a nice look at the pros and cons while Tom Keating offers an extensive user review.) Speaking of Skype, I had lunch with a telecom analyst yesterday who's still stumped why eBay bought Skype and paid as much as $4.1-billion for it. Any way you want to break down the deal, he said, it doesn't make sense financially. A more logical deal is eBay's purchase yesterday of Verisign's payment processing business for $370 million. eBay will merge the business with its PayPal division. VeriSign’s software connects online businesses with payment processors run by major banks.
Now that a few weeks has pasted since the eBay-Skype deal, has anyone figured it out yet?

Cisco Ships 6Mth IP Phone

Mark Evans — Fri, 23 Sep 2005 14:44:21 -0400

Cisco has shipped its six millionth IP phone - to Westpac in Australia. This landmark comes 11 months after shipping its four millionth phone. According to Cisco lore, it took 4.5 years to sell their first two million IP phones and only 14 months to sell the second two million.

Avaya Buys Nimcat for $46M

Mark Evans — Mon, 19 Sep 2005 12:33:17 -0400

Another day, another VOIP start-up snapped up. This time it's Nimcat Networks, which was bought by Avaya for C$46 million. Ottawa-based Nimcat makes P2P communications software that puts networking intelligence in VOIP phones. This lets businesses launch new features without having to buy expensive call processing and application servers. Since Nimcat was created three years ago, it has raised about C$9 million in private equity from investors such as Siemens Venture Capital, Skypoint, Innovatech, Broadcom and the Business Development Bank of Canada. CIBC analyst Steve Kamman said if Avaya is successful with Nimcat, "this potentially disruptive new technology could impactSMB-focused Inter-Tel, Avaya rival Nortel, and Cisco". Tom Tehrani adds Nimcat's purchase leaves Popular Telephony's Peerio as the last man standing in the P2P IP PBX market, while Alec Saunders is looking for Skype to launch new services aimed at the SMB market.

More Love for Nortel in India?

Mark Evans — Fri, 26 Aug 2005 08:24:41 -0400

CIBC World Markets analysts Steve Kamman believes Nortel could get some more love from Indian wireless carrier BSNL, which is expected to unveil a $3-billion RFP soon. The contract would involve a two to three year period and could provide Nortel with more than $500 million of new revenue. It would also let Nortel recoup some or all of the losses (estimated to be around $190 million) from its first $500-million deal with BSNL. Kamman, however, expects BSNL could use three suppliers (Nortel, Nokia and Alcatel with Nokia being the core vendor), which may see Nortel to lose money on the next BSNL deal if it wants to outbid Alcatel for business. More important, Kamman questions whether Nortel can in the long-term achieve enough scale in GSM in the Indian market. "It is worrying to see this battle coming down to a battle for 10% share in a developing market such as India where today's $9 ARPU's are trending to under $3." As the Dominion Bond Rating Service said yesterday, Nortel's ability to grow revenue and compete could depend on new leading-edge technology - an area that Nortel is looking to reduce as tries to rein in operating costs. As much as Nortel CEO Bill Owens wants to focus on international markets such as India and China, it will be hard to make money from this business if you're selling is low margin equipment in an ultra-competitive market. This is one of the reasons why Nortel needs to seriously look at acquiring companies with bleeding or leading edge technology. In other words, they should examinet Cisco's operating model, or for that matter Google's, on how to enhance your technology portfolio without blowing your brains out financially.

Nortel's Credit Rating

Mark Evans — Thu, 25 Aug 2005 14:21:34 -0400

Some much-needed good news today for Nortel Networks as the Dominion Bond Rating Service (DBRS) has removed the telecom equipment maker from its "under review" status, while confirming the ratings of some of the company's debt vehicles. That said, DBRS is still concerned Nortel's strategy on how it plans to compete and grow sales in an increasingly competitive marketplace "seems in flux" given the company's management has been distracted by accounting issues, etc. The credit rating agency also points to the growing use vendor financing as an issue - something where Nortel clearly has a limited appetite to play. "DBRS believes that going forward the company's new directors and senior management need to provide more clarity concerning future strategies. Otherwise, without meaningful growth, the company's SG&A and R&D costs will likely need to be reduced."

VOIP Sales Rocking

Mark Evans — Thu, 25 Aug 2005 07:28:14 -0400

When it comes to VOIP, Google Talk may still be the talk of the town but sales of next-generation voice equipment are worthy of some attention. According to Infonetics Research, VOIP equipment sales in the second-quarter jumped 55% to $614-milion from a year ago. Meanwhile, the number of residential/SOHO customers in North America is expected to jump to 24.3 million in 2008 from 1.1 milion in 2004 as more than six million subscribers will be added in 2006, 2007 and 2008. I wonder how many of people will be Vonage customers - that is if Vonage is still Vonage in three years. In Europe, Infonetics expects the number of people using VOIP to hit 27.8 million in 2008 from 2.2 million in 2004. For Nortel watchers, the company is the leading seller of media gateway and softswitches, followed by Siemens and Sonus.

Good News for Telecom Equipment Makers

Mark Evans — Wed, 24 Aug 2005 14:44:36 -0400

Looks like it's good times ahead for Cisco, Jupiter and perhaps Nortel as Infonetics Research expects enterprise telecom and datacom equipment sales to climb nearly 40% to $79.8 billion by 2008 from $57.5-billion in 2004. Switches and routers will account for the biggest component but Infonetics also expects strong growth from next-generation voice, broadband CPE, wireless LAN and network security equipment.

A Hint of Nortel CEO's Vision

Mark Evans — Tue, 23 Aug 2005 20:51:18 -0400

Okay, I've been a little hard on Nortel Networks CEO Bill Owens over his reluctance to articulate the company's strategic direction. But today at the Progress and Freedom Foundation conference he scolded the U.S. government for its slow adoption of always-on wireless networks and location-identifying technologies. "I wonder if the cabinet members, the policymakers, the key people in our government understand how quickly this is changing," he said in a CNet story. "Who in the United States government is at a level where they're seeing that vision (and saying) they must do something?". Well, there you go: Bill Owens believes in wireless technology but we already knew that from his days at Teledesic. Wireless also happens to be Nortel's biggest business, albeit one whose growth prospects don't look as promising as they did a year ago. The upside is Owens revealed some of his strategic cards in terms of technology, which is a nice change of pace from the government, service and security mantra.

IP-PBX Shipments Jumping

Mark Evans — Tue, 23 Aug 2005 11:34:44 -0400

IP-PBX is hot; traditional PBX is not. That's the scoop according to In-Stat, which expects server-based IP-PBX shipments to triple to 28.1 million lines by 2009 from 9.5 million this year. This momentum will see the number of IP-PBX shipments will surpass those of traditional PBXs, which are only expected to rise 6.6% in 2005. "The IP-PBX is revealing itself as more than a simple one-for-one replacement vehicle for digital systems," said In-Stat analyst Norm Bogen. The Dell'Oro Group expects sales of IP-PBX and hybrid IP/TDM PBXs will climb to $6.1 billion in 2009, an 11% CAGR. Of PBX shipments in four years, Dell'Oro expects 88% will be IP-based compared with 50% in 2004. I wonder how Mark Spencer and Asterisk are doing these days. The last real news I saw was the release of Asterisk@Home, which makes it easy for individuals to set up a VOIP Asterisk PBX using a Web-based GUI.

Juniper Gaining Momentum

Mark Evans — Fri, 19 Aug 2005 08:50:54 -0400

In the enterprise router market, Cisco Systems is still the technology of choice but Juniper Networks is coming on fast. A poll by Infonetics Research shows Cisco leads in every category - except on price and value. Cisco still tops the short list for future router purchases but Juniper is now second as it scores points for value - putting it ahead of Nortel, 3Com, Enterasys and Adtran. From a Nortel perspective, the big challenge is closing the huge market share gap with Cisco. While Nortel CEO Bill Owens has talked about the company putting more strategic focus on the enterprise market to give customers an alternative to Cisco, how does he intend to do it? What role, for example, do acquisitions play? Does Nortel buy Enterasys Networks ($250 million market cap), for example, or hope that its much-vaunted but still-to-be-released Neptune router is able to save the day?

Linksys' New Skype Phone

Mark Evans — Wed, 10 Aug 2005 15:13:29 -0400

According to Tom's Networking, Linksys is about to unveil a Skype-only cordless phone called the CIT200. There's a Canadian angle as the unit will be made Richmond, B.C.-based Ascalade Communications, which recently raised C$40-million in an IPO. Ascalade makes a variety of wireless products such as digital cordless phones, VoIP phone systems, enterprise conferencing phones and baby monitors. The 2,000-employee company does all its manufacturing in Dongguan, China. Looks like Cisco is giving Skype's future a ringing endorsement.

Is Nortel Back?

Mark Evans — Tue, 09 Aug 2005 06:28:38 -0400

Looks like investors are back on the Nortel Networks bandwagon as the stock climbed 13% yesterday after the company posted better-than-expected second-quarter results. Still, a rule of thumb is using Nortel shares as a proxy for the company's prospects is a dangerous game. Investors thought Nortel was going to dominate the telecom equipment market when its stock hit a high of $124.50 in July 2000, and they expected it to file for bankruptcy protection when the stock bottomed out at 67 cents in 2003. Of course, niether scenario materialized. What Nortel demonstrated more than anything yesterday was things have hopefully returned to normal, and there will not be many unexpected surprises going forward. Mind you, "normal" in the equipment business is a difficult concept to pin down given the growing competition from low-cost suppliers in China, as well as the usual global suspects - Alcatel, Cisco, Lucent, et al. For all the progress Nortel has made in righting itself financially over the past year, there are still significant challenges ahead. These include a further reduction in costs, which may include more job cuts as its attempts to lower operating expenses to 30% of revenue by next year. The company also needs to make a few strategic moves/deals to position itself in high-growth areas such as access and routers. It would also be nice for CEO Bill Owens to lay out a strategic vision other than the focus on the U.S. government, security and services.
Ronald Gruia provides some good insight into Nortel's second-quarter results. He points out, for example, that while Nortel's enterprise unit enjoyed strong growth, rivals such as Cisco, Avaya and Mitel had saw healthy sales.

Nortel's Q2: Some Good, Some Not-so-good

Mark Evans — Mon, 08 Aug 2005 09:24:26 -0400

Nortel's second-quarter results have finally been released and I guess the positive news is there are no major surprises. On the plus side of the ledger, revenue was up 10% from a year ago while sales in each of the four business units improved. That said, the wireless unit, which is supposed to be Nortel's growth engine, was up just $8-million, or 1%, due to Nortel missing out on the Cingular contract. Nortel's net income of $45-million was helped by a $58 million gain from "other income", which included $21 million from the sale of an investment and $17 million from a contract settlement. "The end markets look pretty healthy here,'' Gus Papageorgiou, an analyst at Scotia Capital Inc. in Toronto, told Bloomberg before the results came out this morning. "What I'm really concerned about is that their profitability, vis-a-vis their main competitors, is still pretty weak.'' Investors should get some more perspective on Nortel's results when Cisco posts its fiscal fourth-quarter results tomorrow. CIBC World Markets analyst Steve Kamman expects Cisco to benefit from strong U.S. government sales - an area Nortel CEO Bill Owens has heavily targeted with the US$448-million purchase of systems integrator PEC Solutions Inc. earlier this year.

Crazy Cisco-Nokia Rumors

Mark Evans — Sun, 07 Aug 2005 16:31:10 -0400

Om Malik has a good laugh today at a Reuters report suggesting Cisco is pursuing Nokia to get into the wireless industry. "Nokia has been identified as the most likely target," Reuters quotes London's Business newspaper. Let's debunk this story, shall we. First, there is an odd tradition among Sunday newspapers in London to use speculation to create quasi-news stories. It's based on the idea readers want to be titillated by the possibility of blockbuster news rather than read fluffy weekend business features. Second, if Cisco is really serious about getting into the wireless business, Nokia isn't the most likely target; it's probably Nortel or Ericsson. Cisco CEO John Chambers has made it clear he's waiting at the altar whenever Nortel is ready to consummate a deal - whatever that may entail. If Nokia's involved in a major transaction, I suspect it will be a buyer rather than a seller.

Nortel's Q2 Results Delayed. Anyone Surprised?

Mark Evans — Tue, 02 Aug 2005 16:57:21 -0400

Just when you thought everything was returning to "normal" at Nortel, the embattled company said its Q2 results will be delayed until Aug. 8 because it wants to "more closely align with the filing of its second quarter of 2005 quarterly report on Form 10-Q with the U.S. Securities and Exchange Commission." This claim may be valid but don't you think Nortel could have done more homework before announcing its Q2 results would come out Aug. 3? You would think someone within its executive suites or financial team would have thought about aligning Nortel's results with whatever the SEC requires. Then again, this is a company that has become "The Gang Who Couldn't Shoot Straight" of the telecom sector. While a five-day delay is a minor faux pas, it just another in a growing list of bizarre moves. This is without getting into the mysterious departure of COO Gary Daichendt after only three months on the job.

Cisco Moves into the DVD/DVR Market

Mark Evans — Fri, 22 Jul 2005 11:23:50 -0400

Cisco's $61-million acquisition of KiSS Technologies is attention-grabbing and worthy of some analysis. KiSS makes networked DVD players and recorders and other home video products. Its technology can access content on the Internet or from other devices within a home network. The acquisition will let Cisco grow its presence in the home-networking market by leveraging on the Linkysy portfolio. CIBC analyst Steve Kamman thinks Cisco will probably get into the video DVR and set-top box market, which could pit it against players such as Scientific-Atlantic. Kamman thinks Cisco will pursue the IP-TV set-top box market. He does not believe, however, Cisco will aggressive pursue KiSS's cool-sounding "Surround Sofa" project, which involves speakers built into a sofa. "We do expect Cisco to grow by moving into adjacent markets, but don't see "Upholstered Furniture" as a likely new Adv. Tech. area in the near future," he wrote - clearly with tongue firmly in cheek. From a number of perspectives, you have to applaud Cisco's approach to acquisitions. It's aggressive, forward-thinking, pro-active and not without some risk. At the same time, this approach has become increasingly necessary as competition intensifies and there is more pressure to stay ahead of the pack.