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Corvis Closing in on New Customers

Light Reading
News Analysis
Light Reading
3/26/2001

Corvis Corp. (Nasdaq: CORV) is getting close to announcing some fresh customers.

Several sources close to the company have confirmed that the optical networking startup is expected to announce at least two more telecom carrier customers as early as the next few weeks. The names, however, are still being kept under wraps.

Recent product additions designed to enlarge the customer base may soon have that desired effect (see Corvis Eliminates EDFAs and Corvis Offers 3.2-Tbit /s Transport System). For example, the CorWave LR, a DWDM (dense wavelength-division multiplexing) transmission product announced last week, is expected to expand Corvis's market into Europe. The product was derived from technology Corvis acquired when it bought Algety early last year. Algety was orginally spun out of France Telecom SA as a play for European networking markets.

"They're going to be announcing some customers soon," says Chris Nicoll, vice president with Current Analysis. "We'll see what the details are."

New customers would give Corvis -- and its investors -- a needed boost. Since going public in the summer of 2000, the company hasn't announced any additional customers (see Customer Questions Dog Corvis). In addition, all of its existing customers, which include Williams Communications Group (NYSE: WCG), Qwest Communications International Corp. (NYSE: Q), and Broadwing Communications (NYSE: BRW), were given pre-IPO shares or warrants to invest in the company. So far, Corvis has only recognized revenue from sales of its CorWave switching and transport products to Broadwing.

Corvis VP of engineering Dave Smith, interviewed at an investor conference at last week's Optical Fiber Conference, said that the CorWave LR is designed specifically for European carriers and that he expected the company to find European customers for the products, though he wouldn't comment on specifics. The CorWave LR has a shorter reach but a larger switching capacity, making it a better fit for Europe's shorter reach, higher density networks, said Smith.

Smith, also said the CorWave LR product was part of the deal with Qwest, an announced Corvis customer that hasn't yet bought any products.


"Estimates right now include three customers, so announcing two new customers would be incremental to our estimates," says Jim Jungjohann, analyst with CIBC World Markets. "We're quite comfortable with the full year, but we see some concern about revenue recognition in the June quarter."

Jungjohann said he rates the stock as a Buy and thinks the shares are reasonable at their current level (Corvis was recently trading at about $8). He noted that Corvis is sitting on $3.50 per share in cash.

Corvis officals had not returned requests for comment by press time.

-- R. Scott Raynovich, Executive Editor, Light Reading http://www.lightreading.com
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CogswellCogs
CogswellCogs
12/4/2012 | 8:40:37 PM
re: Corvis Closing in on New Customers
I appreciate the non-slanted, factual report. I'll even take back (some of) the things I've said against LR! All I want is for all companies, whether advertisers or not, to be treated equally, and this is a positive example.
Rugger
Rugger
12/4/2012 | 8:40:36 PM
re: Corvis Closing in on New Customers
I am also heartened to see the non-biased story. Having said that, I will believe new customers when I see them. I hope it's good news; Corvis could use some.
optical_guy
optical_guy
12/4/2012 | 8:40:34 PM
re: Corvis Closing in on New Customers
I know that I have made a stink when I thought past articles were bias or one-sided. Therefore, it is incumbent on me to add my voice to those who have complimented LR for what appears to be a very balanced article.

Yes, it is true that new customers are needed and Corv thinks that they are doing something about it, but also true is that these new customers are not on the table yet and without them Corv's outlook is much different.

Thanks for the article LR.
areyousure
areyousure
12/4/2012 | 8:40:27 PM
re: Corvis Closing in on New Customers
Yes Yes, Kudos from the Corvis diehards :-)

I'm not saying it was bias or unbiased, I'm just glad it wasn't another negative Corvis story ;-P

We'll see if Corvis can deliver on it.
optinuts
optinuts
12/4/2012 | 8:40:23 PM
re: Corvis Closing in on New Customers
what is this, a lovefest for corvis wannabees?
areyousure
areyousure
12/4/2012 | 8:40:22 PM
re: Corvis Closing in on New Customers
optinuts forced us to read this crap:


"what is this, a lovefest for corvis wannabees?"

No, its a lovefest for journalistic integrity. LR finally printed a positive article about a good company instead of a "Dear John" letter to her ex-boyfriend.

As a stockholder, yes I am happy about this. What's your interest?

Based on your comment, I could justifiably ask if you are a Nortel/Ciena/Cisco/insert-vendor-here wannabee and upset about new customer announcements? What's your problem with people giving prop's to LR to show that they like the article?

Explain.

Please, I'm dying to hear your "reasoning" for your worthless post.
cfaller
cfaller
12/4/2012 | 8:40:21 PM
re: Corvis Closing in on New Customers
Everyone thinks that this is a good, unbiased, etc. article that shows that LR has journalistic integrity. The article reported a rumor about some good news that should come from Corvis later this week. No hard facts, mind you.

I find it to be an interesting coincidence that when LR is publishing rumors about bad news, everyone is up in arms over their integrity and reporting style. When it's a rumor about good news, well now, that's something different isn't it?

We are in an economic downturn, where bad earnings, layoffs, and shutdowns will be the norm. The sooner everyone realizes that this is not LR's fault, the better. Don't kill the messenger...
Rugger
Rugger
12/4/2012 | 8:40:21 PM
re: Corvis Closing in on New Customers
I think there has been so much said on the negative side about LR (and rightfully so, in my opinion) that people are genuinely pleased to see something positive. Dull can be okay - a slow and steady rise in stock price can be considered dull but it is a good thing nonetheless.
optinuts
optinuts
12/4/2012 | 8:40:21 PM
re: Corvis Closing in on New Customers
ok, so one comment on a good article is fine, but when 4 crop up saying the same thing, its a little dull. thats all.
Scott Raynovich
Scott Raynovich
12/4/2012 | 8:40:20 PM
re: Corvis Closing in on New Customers
areyousure:

So your definition of "journalistic integrity" is that all coverage must be positive? That's pretty misguided.

Yes, you might say the analysis in this story is "positive." But that's this week's news. We have no regrets about past critical analysis of the company--especially when it was trading at a $30 billion market cap. In fact, we're pretty proud of it. The stock is now trading at $8 per share--which makes it a much more reasonably valued company. That's investment analysis for you!

In fact, our anlysis of the company's mind-boggling IPO valuation last summer has proven entirely correct.

All companies have their ups and downs--they make good and bad moves. That's what makes the industry interesting. And we'll continue to stick our neck out and analyze them as such. That's why people read us.

Disclosure: As stated in our editorial policy, I own no Corvis stock, nor have I ever short-sold it.

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