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Corvis Feels Qwest Fallout

Light Reading
News Analysis
Light Reading
12/18/2001

Shares of Corvis Corp. (Nasdaq: CORV) continued to dip Tuesday, as the fallout from Qwest Communications International Inc.'s (NYSE: Q) capital spending cuts sifts down to its optical systems suppliers.

Citing Qwest's cuts, a one-page note issued by Merrill Lynch & Co. Inc. on Monday suggested investors take a "more cautious intermediate term view" of Corvis's stock.

Corvis shares were down 0.18 (6.77%) to 2.48 in trading Tuesday. In contrast, the Light Reading Index was flat, rising 0.03 (0.01%) to 213.74.

Last week Qwest warned Wall Street that it will fall short of its expected revenue target, and it cut capital spending projections for 2002 to between $4.2 and $4.3 billion from $5.5 billion (see Qwest Lowers Expectations and What's Behind Qwest's Numbers?).

Merrill analysts Simon Leopold and Michael Ching write that because of Qwest's cuts they don't see Corvis booking any revenue from its $150 million Qwest contract in 2001.

"We now expect [Corvis's] 2001 sales to reach $192 million down from $199 million," the analysts write.

Over the long term, however, Merrill's analysts see Corvis being an important optical systems player, given its lead in long-haul WDM transmission systems designed for network spans greater than 600 km. Citing industry forecasts by RHK Inc., the analysts point out that, while North American long-haul spending is expected to drop 10 percent next year, spending for the greater than 600 km segment will grow to $730 million.

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com

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HarveyMudd
HarveyMudd
12/4/2012 | 7:25:11 PM
re: Corvis Feels Qwest Fallout
I do not think that QWEST is to be blamed for the fate of CORVIS. There is not much demand for the optical networking products by the ISPs, Carriers and Service Providers.

In order to get a foothold in the market. they attempted to deflect attention by focusing on the merits of all optical networking and some other trivial items for debate.

The fact is that not all optical companies would survive. The sooner this lesson is learned the better off we would be.

Everyday there is some new twist to the story.

Every day there is some new twist
optical_guy
optical_guy
12/4/2012 | 7:25:10 PM
re: Corvis Feels Qwest Fallout
"In order to get a foothold in the market. they attempted to deflect attention by focusing on the merits of all optical networking and some other trivial items for debate."

I have to agree with Gea.....that really is a completely inane statement.....which doesnt' really address the point of the article to which that this tread is related.

Perhaps they should have focused attention on the benefits of old legacy equipment....yeah, now there's a strategy.

OG
aaaaaaptics
aaaaaaptics
12/4/2012 | 7:25:10 PM
re: Corvis Feels Qwest Fallout
belzebutt, you're not much of a salesman if you believe the customer is always right. that's sales 101.


Belzebutt
Belzebutt
12/4/2012 | 7:25:10 PM
re: Corvis Feels Qwest Fallout
Perhaps they should have focused attention on the benefits of old legacy equipment....yeah, now there's a strategy.

If the old legacy equipment can be bought cheap and added to the network cheaply (without having to re-engineer it), then it's an option for cash-strapped carriers.

Don't attack me for saying this, it's reality. We would all love carriers to buy our new stuff but if you look at the orders, the "old legacy equipment" is selling very well. Are you going to blame your customers for that? Isn't the customer always right?
gea
gea
12/4/2012 | 7:25:10 PM
re: Corvis Feels Qwest Fallout
Harvey Mudd wrote...

"In order to get a foothold in the market. they attempted to deflect attention by focusing on the merits of all optical networking and some other trivial items for debate."

Harvey, your inane coments never cease to amaze me. What amazes me even more is the fact that you don't appear embarrassed to make statements such as the above.

As for Corvis, they still have a HUGE amount of cash that they can sit on for a while to weather the storm. When things revive next year, they'll either bleed a long, slow death, or be the next Ciena. Too early to tell, though. In any event, Harvey Mudd will be on the sidelines muttering incoherent conspiracy theories.



Lightwoman
Lightwoman
12/4/2012 | 7:25:10 PM
re: Corvis Feels Qwest Fallout
gea..

Cash doesn't matter if you don't have the human capital to back it up. And the fact is, quality of life and work at Corvis is very poor and people in the industry know it. So talent is drifting out little by little, which makes it difficult for them to move to the next generation of products to replace the ones they have now and which are obsoleting.
As for Ciena, they will have an ultra long haul solution by the time there is any hint of recovery next year, and they will probably take special care to try and crush Corvis. They probably have a good shot at it given the lack of any coherent strategy from Corvis management.
Frankly, the cash should be returned to the shareholders because at the end of the day they will end up ahead if they put their money in some money market fund.
Belzebutt
Belzebutt
12/4/2012 | 7:25:08 PM
re: Corvis Feels Qwest Fallout
belzebutt, you're not much of a salesman if you believe the customer is always right. that's sales 101.

And what company are you from?
aaaaaaptics
aaaaaaptics
12/4/2012 | 7:25:04 PM
re: Corvis Feels Qwest Fallout
does it matter? let's just say i'm not in your business but "business is business", right?

all i'm saying is that the customer is never always right. i don't care what you sell....sometimes the customer is very wrong and it takes a great salesman to prove (show) him that they are. obviously this has to be done with much care so that you don't insult your customers' inteligence or bad mouth their name. that's where a good companies and salesmen succeed. they are not slaves to the customer but they bring value to the table. much like what Corvis brings to the table. IMHO.

this is a good discussion....sales 101

aaaaaaptics
aaaaaaptics
12/4/2012 | 7:25:04 PM
re: Corvis Feels Qwest Fallout
you've put words in my mouth....that's not what i was referring to in the general sense.

the customer is NEVER always right!!!!
simple as that.
boson3
boson3
12/4/2012 | 7:25:04 PM
re: Corvis Feels Qwest Fallout
"i'm saying is that the customer is never always right"

so we can infer that "The customer is alway's right, unless the salesman is a Corvis rep"?

and

"If the salesman is a Corvis rep, then the product is not what the customer needs"...

This is interesting sales 101.

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