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Optical/IP

Analyst: Verizon Optical Shopping

Verizon Communications Inc. (NYSE: VZ) is getting close to choosing vendors for a new long-haul optical network, says one Wall Street analyst.

Yesterday, Paul Silverstein of Needham & Co. published a research note stating that Ciena Corp. (Nasdaq: CIEN), Corvis Corp. (Nasdaq: CORV), Innovance Networks, Lucent Technologies Inc. (NYSE: LU) and Siemens AG (NYSE: SI; Frankfurt: SIE) have all made the "short list" for a project that will dramatically expand the carrier's long-haul optical network.

Silverstein estimates the buildout could generate between $100 million and $200 million in optical equipment revenues over the next two to three years, making it one of the more significant contracts in the industry. He noted that Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Nortel Networks Corp. (NYSE/Toronto: NT) did not make the short list. He expects the supplier or suppliers to be chosen by the end of this year.

Verizon declined to comment.

Verizon issued a request for proposal to vendors in early August this year (see Verizon Deal: Too Soon to Hope?). Details weren't available at the time, but many analysts speculated that it was connected with Verizon's plans for building its new nationwide IP network (see How Will Verizon Go National?).

While there's no question that Verizon has been looking at long-haul optical equipment, some analysts say the carrier is still investigating its options, and that any equipment valuations are part of its cost-benefit analysis. "We suspect it's more likely a fishing expedition," says Simon Leopold, an analyst with Merrill Lynch & Co. Inc..

Up to this point, Verizon has leased capacity from wholesale carriers. While the carrier has publicly stated that it would like to have its own transport network, Leopold says it hasn't determined whether or not that would be the most cost-effective solution. He believes it could still be a while before Verizon crunches all the numbers and suppliers realize any revenue from a potential deal.

Steven D. Levy, an analyst with Lehman Brothers, also suspects the company is still debating "buy-versus-build" scenarios. But he says that if Verizon does build its own long-haul optical transport network, it would represent an important shift in momentum for the technology segment, which has long been languishing in the doldrums.

— Marguerite Reardon, Senior Editor, Light Reading

jimmy 12/4/2012 | 11:20:56 PM
re: Analyst: Verizon Optical Shopping and then there were 4....
lightshow 12/4/2012 | 11:20:53 PM
re: Analyst: Verizon Optical Shopping Now that is interesting.....when this article first appeared, Innovance was not included on the list.....now they are. Given that Cienna and Lucent do not have an "agile photonic" network, I guess it is down to Corvis and Innovance, and we all know that the Corvis gear does not work, so this should be interesting, unless of course that is not what BigV is looking for.
Machavelli 12/4/2012 | 11:20:50 PM
re: Analyst: Verizon Optical Shopping It doesn't surprise me.

It looks like the "America First" policy was not only adopted by the DOD, but by many RBOCs and IXCs as well.

I guess the stance on Iraq of the mother countries of many telecom suppliers is starting to hurt them: Nortel (Canadian), Alcatel (French)and Siemens (German).

It is a shame the Marconi optical division went belly up, they could help used Britian's stance on Iraq to leverage some sales into the US.

"M"
CogswellCogs 12/4/2012 | 11:20:49 PM
re: Analyst: Verizon Optical Shopping lightshow whined:

"and we all know that the Corvis gear does not work,"

Hmmm, someone better tell the Broadwing customers! Maybe what "we all know" is that lightshow is clueless and works for Innovance. Of course, that was obvious from the posts in "Ceyba Goes Ultra-Long" and all of the other pro-Innovance posts. Amazing what a search can show you.

Hope this helps,

Cogs
lightshow 12/4/2012 | 11:20:48 PM
re: Analyst: Verizon Optical Shopping Now there is a laughable post!!!!

Not that it really matter, as it does not change the fact that Corvis gear sucks the big one, I do not work for Innovance, but do applaude their product, and I am a supporter.

You on the other hand, MUST work for Corvis or Broadwing, as your arrogance does shine through. Last time I checked most customers think you guys suck. I use the word "most" as I must exlude Broadwing...but then again, should I say Corvis.

Corvis has been kicked out of so many labs.....maybe you can shed some light on that. Had it not been for the bubble, Corvis would not be around. The bank account is practically gone and their only hope in hell is to keep selling to themselves.

Given the track record and bribes that Corvis is famous for, I would not be surprised to hear that the only reason customers still use the Broadwing network is because the are not paying much for the service.

Aside from the equipment issue, Corvis's arrogance is the second reason they will crash and burn! You know....kinda like when they rushed to post that they made the DISA short list just ahead of the earnings call.... LOL....LOL...how pathetic! It was great to see that press release get yanked from their web site!! Sure made them the laughing stock of the year....AGAIN.

Anyway Cog....you might wanna go un-Clog....release some of that hot Corvis air....

Cheers
SolarSailor 12/4/2012 | 11:20:47 PM
re: Analyst: Verizon Optical Shopping ... is that CIEN's got it in the bag. Can't imagine why else Gary Smith is grinning like a fool these days. Kind of ironic really, after all this, its Ciena's core competency thats winning them business, none of that new fangled stuff.
SIVROCX 12/4/2012 | 11:20:46 PM
re: Analyst: Verizon Optical Shopping Ars,

When you say taht the 10G product failed, could you define failure. Also which large contract, if other than GIB-BE or AT&T do you refer? Ω awaiting your reply.
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