Avici Drums Up Another Customer

Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) today announced its second customer deployment in less than a month.

The company announced today that Global NAPs, a national carrier for voice and data services, has deployed Avici Systems SSR Routers as part of its nationwide network expansion. On October 3, it also announced that Qwest Communications International Inc. (NYSE: Q) was deploying the SSR in five of its points of presence as part of its national broadband buildout. This deployment is part of Qwest’s contract with Avici that dates back to October of 2000.

While any customer win in this economic climate is seen as a good sign, it’s hard not to notice that the company made the announcement the day before it is expected to announce disappointing third-quarter results. Coincidentally, the company also announced the Qwest deployment the day the company warned Wall Street that it would record higher than expected losses and fall short of its revenue expectations.

What's it all mean? Any new announcements are important. The company has relied primarily on AT&T Corp. (NYSE: T) as a customer since its inception. It has also announced deals with Taiwanese Chunghwa Telecom Co. Ltd. and the bankrupt Enron.

Avici has announced customer trials with carriers like France Telecom SA (NYSE: FTE), Deutsche Telekom AG (NYSE: DT), and Williams Communications Group Inc., but these have yet to bear fruit. Expanding its customer base is crucial, as Avici has been running a distant third to Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (Nasdaq: JNPR) in the IP core router market for the past two years.

When it pre-announced its earnings earlier this month, the company said that AT&T accounted for more than 10 percent of its business for the quarter. No big surprise. But what is surprising is that Qwest was a 10 percent customer in the quarter, too.

And now Avici has announced another customer win, showing that even in a depressed market it is still making strides to increase its customer base.

But the fact remains that even with these customers Avici has still been missing expectations, which is not surprising given the poor performance of the market leaders: Juniper and Cisco (see Juniper's Good News Fails to Impress). After the news was announced, the company's shares ended the day unchanged, at $0.68. On October 3, the day of the pre-announcement and the Qwest release, it held steady at $0.60.

Avici will release its third-quarter financial results tomorrow before the market opens. In the pre-announcement, the company stated that it expects to lose $0.32 to $0.34 a share in the quarter, excluding costs related to its recently announced job cuts and other one-time items. In the year-ago quarter, it lost 39 cents a share. Its revenues are expected to be around $7 million.

In late September, Avici said it would cut almost a quarter of its work force and was seeking shareholder approval for a 1-for-5 reverse stock split to help ensure its continued listing on the Nasdaq exchange.

— Marguerite Reardon, Senior Editor, Light Reading
deepciscothroat 12/4/2012 | 9:29:32 PM
re: Avici Drums Up Another Customer Company is dead man walking
should get them to dig their own grave before they expire
mu-law 12/4/2012 | 9:29:31 PM
re: Avici Drums Up Another Customer For god's sake, why have we latched on to this as some sort of existence proof, when no terms have been disclosed?

Since when is gnaps in the category of supercarriers whos contracts a company can make? How many other washed-up companies have had a gnaps "win" as the linchpin of their supposed upswing?

I'd like to see Avici succeed in the core router market as much as (maybe more than) the next guy, but a little more cynicism in the analysis would make it a lot more credible.

reoptic 12/4/2012 | 9:29:30 PM
re: Avici Drums Up Another Customer These Naps guys seem to be making money and apparently Verizon owes them a bunch for carrying their traffic. Imagine a CLEC that is making money that wants to buy next gen gear! The Avici guys have a ways to go but they have a fair amount of cash to ride things out vs. the startups. Whatever happened to Caspian, Procket and Hyperchip anyway?
Quantamay 12/4/2012 | 9:28:54 PM
re: Avici Drums Up Another Customer As far as I know, Hyperchip is still in the run... they're just in the -˝ save the money-+ mode and it's the only way to go... if you can see a wall of something in front of you as your cruising down at 180km an hour, if you're not the intelligent type you will not slow your car down... in the mind of the Hyperchipers, it's just a way to slow down and check out the traffic before hitting the gas peddle even harder !!!

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