Is AlcaLu's FiOS Share Slipping?
Alcatel-Lucent (NYSE: ALU) appears to be losing share as Verizon chooses to use more of Motorola's gigabit passive optical networking (GPON) equipment, analyst George Notter of Jefferies & Company Inc. writes in a note published this morning.
While AlcaLu and Motorola were both selected for FiOS in 2006, AlcaLu got deployed first and was understood to be Verizon's primary GPON vendor. (See Alcatel Joins Verizon PON Party.)
But Motorola could have a 50 percent share of FiOS's GPON purchases within a couple of quarters, Notter writes, adding, "We had anticipated that Motorola would remain a distant second source in the deal."
Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) was also selected but dropped out last year. The decision, as CEO Rob Pullen told Light Reading, came down to Verizon's requirement for combining the optical line terminal (OLT) with a service router -- a tall order in a business segment that's not wildly profitable to begin with. (See Tellabs Kills Its Verizon GPON Efforts and Rob Pullen, CEO, Tellabs.)
AlcaLu won't comment on the market share picture, but a spokeswoman notes that Verizon had always intended FiOS to be a multi-vendor network. "We did a substantial amount of work with them in 2008 and we intend to do a substantial amount in 2009," she says. AlcaLu shares were trading unchanged at $1.86 each mid-afternoon, while Motorola shares were up 23 cents (6%) at $4.11.
Separately, Notter thinks AT&T Inc. (NYSE: T) is ready for a second vendor for Project Lightspeed, the broadband buildout that drives the carrier's U-verse TV service. Adtran Inc. (Nasdaq: ADTN) "may be well positioned" for the $50 million to $75 million-a-year opportunity, Notter writes. Other names being mentioned are Ericsson AB (Nasdaq: ERIC) and Huawei Technologies Co. Ltd.
— Craig Matsumoto, West Coast Editor, Light Reading