The first list is for the Global Information Grid Bandwidth Expansion (GIG-BE) project, an optical network proposal from the U.S. Defense Information Systems Agency.
In a note to clients today, analyst Steven Levy and colleagues at Lehman Brothers say new information targets Ciena Corp. (Nasdaq: CIEN), Cisco Systems Inc. (Nasdaq: CSCO), Corvis Corp. (Nasdaq: CORV), Lucent Technologies Inc. (NYSE: LU), and Sycamore Networks Inc. (Nasdaq: SCMR) as finalists in a lab bakeoff that Science Applications International Corp. (SAIC) is conducting for the government.
Lehman's prediction is in line with the analysts' earlier speculation (see Lehman Spots Gov't RFP Surprises) and an announcement from Corvis (see Corvis Solo in Bake-Off Boast), but there are a couple of surprises: First, Sycamore was considered a strong contender all along, but the analysts didn't include it as a finalist before. Now, it looks as if Sycamore has beaten Lucent Technologies Inc. (NYSE: LU) into the optical crossconnect bakeoff, joining Ciena as a finalist there, one of the four categories of gear DISA's evaluating for the $800 million to $900 million project. The other three categories are optical transport, IP routers, and multiservice provisioning platforms.
Another surprise is the absence of Nortel Networks Corp. (NYSE/Toronto: NT) from the Lehman shortlist. Steve Levy says he has no sense of why Nortel hasn't made it to the finals -- at least, according to his sources. But he stresses these RFP shortlists aren't written in stone: "We... understand that some vendors not chosen for the final testing continue to negotiate with DISA/SAIC in order to get a spot for the bakeoff lab testing, and may ultimately secure a spot... things may change before contracts are awarded," he writes in today's note.
As of press time, none of the vendors mentioned in this article had any fresh comments to make. With the exception of Corvis, they seem to have been struck dumb with fear of revealing anything to the press regarding these RFPs. A final surprise: Lehman isn't sure who'll make it to the IP Router bakeoff, but the firm is sticking with speculation early in July that Cisco and Juniper Networks Inc. (Nasdaq: JNPR) might "split the subcontract win."
Table 1: Lehman's Latest GIG-BE Snapshot
|GIG-BE RFP subcontract||Est. size over 2 years||Probable winner(s)|
|Optical transport||$200M to $300M||Ciena, Corvis|
|Optical crossconnect||$100M to $150M||Ciena, Sycamore|
|MSPP||$150M to $200M||Cisco, Lucent|
|Source: Steven Levy, Tim Luke, and Marcus L. Kupferschmidt, Lehman Brothers Equity Research|
The Lehman findings tally generally with those of other financial researchers. In a note published by analysts at UBS Investment Research on July 31, however, there was a key difference: The UBS analysts said Lucent would likely end up with Corvis as the finalist in optical transport, since the government wasn't likely to pick more than one primary provider per subcontract category. Ciena was already thought to be leading the competition for optical crossconnects, also called "optical-electrical-optical switching" by UBS.
Levy of Lehman says no information he has indicates the government would be averse to picking a vendor for more than one category.
The second big RFP making the spotlight is the "Fiber to the Premises" project spearheaded by four RBOCs (see Fiber Access Plans Proliferate). Here, lips are sealed especially tightly (see Vendors Await FTTP Shortlist), but Lehman's note today says Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI), and a team-up of Motorola Inc. (NYSE: MOT) and Quantum Bridge Communications Inc. are probable shortlisters.
The surprise here is AFC, which Levy acknowledges hasn't been a high-profile name in passive optical networking (PON), the chief technology the RBOCs are evaluating. The vendor was thought to be a possible third-string choice by UBS in an evaluation last month (see UBS: Alcatel Could Win PON RFP).
Levy admits this shortlist may not stay that short. Nothing indicates, for instance, that the pairing of Optical Solutions Inc. and Nortel Networks Corp. (NYSE/Toronto: NT), once touted as a possible winner, is completely out of the picture. Like the GIG-BE, the FTTP RFP "won't be over till it's over," Levy says.
— Mary Jander, Senior Editor, Light Reading