Fujitsu's division gets a potentially lucrative Sonet contract, but Lucent and Nortel are still in the running

June 24, 2003

2 Min Read
FNC Lands Big Verizon Gig

Fujitsu Network Communications Inc. (FNC) says Verizon Communications Inc. (NYSE: VZ) has picked its gear to upgrade the carrier's Sonet networks.

The three-year deal involves several of FNC's next-generation Sonet add/drop multiplexers, including its Flashwave 4500 core transport system, its Flashwave 4300 aggregation system, and its Flashwave 4100 access system. Besides the usual need to trim operating expenses, the upgrade will help Verizon offer some newer services, such as 10/100 and Gigabit Ethernet connections, according to FNC's product marketing manager Bob Laurent.

FNC's selection isn't really a surprise. The company is an incumbent supplier in Verizon's network with some 85,000 nodes, according to John Stewart, FNC's senior director of marketing and corporate communications.

FNC won't say how large the order is, but Stewart says it will have a "significant business impact" on FNC over the life of the contract.

Though FNC gets a nod toward affirming the company's leadership position in the Sonet market, Verizon isn't done picking vendors just yet, according to sources close to the carrier.

Verizon expects to finalize contracts with two other vendors -- Lucent Technologies Inc. (NYSE: LU) and Nortel Networks Corp. (NYSE/Toronto: NT) -- in the next week or two, according to a source close to the carrier.

According to another source familiar with the situation, FNC, Lucent, and Nortel were the final three selected in a process that began back in October 2001, when it invited six vendors in for consideration. Cisco Systems Inc. (Nasdaq: CSCO), Marconi Corp. plc (Nasdaq/London: MONI), and one other vendor were eliminated between October 2001 and December 2002.

In a note sent to clients this morning, Merrill Lynch & Co. Inc. analyst Simon Leopold confirms our sources' information. "In spite of Fujitsu's announcement, we still expect that Lucent will win Verizon's business... which is meaningful because Verizon is Lucent's largest customer, providing nearly 20 percent of sales," he writes. "We believe that Lucent and Fujitsu will receive about 40 to 45 percent of purchases each and Nortel will get the remaining 10 to 20 percent of Verizon's new Sonet purchases."

In January 2003, FNC announced it had earned Verizon Testing Partner certification, something required of equipment vendors before they can be deployed in Verizon's network. FNC says it signed the equipment contract with Verizon in April.

So maybe FNC isn't all alone in Verizon, but at least it didn't suffer another loss at the hands of Cisco (see Fujitsu Sounds Off and BellSouth Chooses Cisco (and Lucent)). FNC's other next-generation Sonet ADM customers include SBC Communications Inc. (NYSE: SBC), Rogers Communications Inc. (NYSE: RG; Toronto: RCI), Alltel Corp., Cox Communications Inc. (NYSE: COX), and Qwest Communications International Inc. (NYSE: Q) (see Fujitsu's Got a Grip on SBC).

— Phil Harvey, Senior Editor, Light Reading

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