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Optical/IP

Cisco Eyeing Sonus

Several sources say that Cisco Systems Inc. (Nasdaq: CSCO) and Sonus Networks Inc. (Nasdaq: SONS) have been talking – and those discussions could lead to acquisition by Cisco.

So far the relationship has been described as exploratory, say sources close to investment banking interests. Light Reading could not confirm whether a deal had been made or what the price would be.

Sonus builds voice over IP (VOIP) gateways for carriers that allow them to carry voice traffic over packet-based network.

One venture capitalist familiar with the market, speaking under condition of anonymity, said a deal would likely get done at a slight premium and said he could see Sonus being sold for $5 or $6 per share. Sonus was trading at $3.20 during the late afternoon today.

Another source pointed to Paul Ferri, partner at Matrix Partners and Sonus board member, who is known for his impatience when companies hit rough patches, as Sonus has. This source tells Light Reading that Ferri may have an itchy trigger finger: "When Ferri decides to do something, he makes it happen." (See Top Ten Movers and Shakers, No. 5.)

Would a combination of Cisco and Sonus make sense? On many levels, it seems like a good fit. Here’s why:

  • Sonus is widely regarded as a leader in the voice softswitch market, and Cisco has struggled to build a leadership position in that market.
  • The capital-spending crunch in the telecom market has put the emerging VOIP market on ice, chilling Sonus’s prospects for near-term growth.
  • Sonus’s numbers have recently hit a rough patch. For the fourth quarter of 2001, the company reported revenues of $38.9 million and an adjusted net loss of $7.7 million. The company also warned that revenue was expected to decline again in the first quarter of 2002, but it has not provided specific guidance.
  • With losses, Sonus’s financial position has deteriorated, and they may be in need of a deep-pocketed partner to get them through the lean years. For example, as of the end of 2001, Sonus had $125 million in cash and short-term investments. One quarter earlier, the company held $137.4 million in cash and short-term investments.
Some analysts describe the combination as an evergreen rumor on Wall Street, but they say that's because the deal makes sense.

"It would be a great fit, because Sonus has strong technology and it's successfully deployed in large carrier networks," says Richard Church, a senior analyst with Wachovia Securities. "Cisco has talked about this as a tornado market, but so far they're only in the enterprise [market]."

Church said that with $125 million in cash, Sonus could stick it out as an independent company and have enough funds to last well over a year if it continues losing money at the current pace. However, he noted that it is more difficult to sell products to large carriers, especially RBOCs and ILECs, as a small independent company.

However, news of the talks was greeted with skepticism by some. "That rumor comes around every week," says Sam Wilson, an analyst with Merrill Lynch & Co. Inc. "But I doubt Cisco is very interested. Sonus is going after the Internet offload market, and that market has pretty much peaked already. It's also unclear if they'll offer class-4 or class-5 replacement." Wilson said Cisco is more likely to be interested in a smaller, private company.

Another factor: Cisco has said it still plans to do acquisitions this year, just on a smaller scale. But it has also said it’s looking for a company with shipping product. Sonus fits that description.

Sonus officials could not be reached at press time. A Cisco spokeswoman said the company had no comment.

— R. Scott Raynovich, US Editor, and Marguerite Reardon, Senior Editor Light Reading
http://www.lightreading.com
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skeptic 12/4/2012 | 10:48:31 PM
re: Cisco Eyeing Sonus So given the vendors at large, who do you think meets this criteria the best?
--------------

Out of the vendors where information is available:


Packet forwarding: Juniper (because of the ACL
requirement and because
BT doesn't mention packet
reordering)

Protocol limits: Juniper and CWNT
(but nobody has reached those MPLS
benchmarks in public yet).
Reliability: Nobody even comes close.
everyone fails.
Interoprability: Cisco (because whatever they
do ends up being defined as interoprability)

Everything else is about even (more or less).





System Availability:
All the current vendors get a "D"


Hardware Redundancy
I think everyone will meet this with
the exception of the 50ms failure time in
some cases.

Software Redundancy/Hitless Upgrades

Nobody meets this. Cisco's new scheme
to change OSPF/ISIS/BGP is a non-starter as
far as I'm concerned.

The Pluris HA story
(at least for BGP) seems even worse, but its
so strangely described that I still can't
figure out exactly what it is.

As far as Hyperchip goes, beyond buying Ads
on Lightreading, there is not information on
what they are doing.

Caspian. No details from Caspian beyond saying
that they are doing "something". Its still not
clear if the "something" is tied up with their
propritary networking protocols or not.



Hardware Availability
Maybe people can meet this. The software
always seems to mask the true hardware
availability.

Software Availabilty
Everyone gets a D or an F.

Wirespeed packet forwarding
If QOS and ACLs are on, probably but
juniper can meet their metric. Given how
badly the light reading router test went,
its hard to tell how anyone beyond CWNT/cisco
/juniper will do.

Of course not mentioned is reordering.
If packet reordering is an issue, Juniper gets
an "F".

Efficient protocol implementations

- This section is mostly useless. These
are not the real requirements for a core router
in most cases:

Examples:
- The flapping tests don't mean anything
without knowing the type and number of
peers.
- IGP convergence time of 5 seconds in
what circumstances?
- How many links for ECMP support?
- 20,000 IGP routes in what sort of
topology?
- 1 M BGP routes where? In BGP or in
the FIB? (or in Juniper's case out on
a hard drive).
Range of interfaces
Most people should meet this.

Multicast
In my opinion, its still unclear what the
real requirements for multicast in networks are.



Quality of Service
Most people should be able to meet this.
Certain routers may have a problem with
latency.

IP/Optical internetworking
They might as well have left it out because
they didn't provide what should be supported.

Security requirements
Most people should meet this. The only
exception being MD5 for IS-IS which I dont think
cisco does. And I don't know how many people
do port mirroring.

Management features
Again, nothing special here. The integrate
with existing OSS is (intentionally) vague it
seems. So how can vendors be measured?



Environmentals
Which NEBS? How much power? How much
heat? Its all too vague for anyone to do
anything with. Which NEBS is actually an
important question as is the "maximum"
environmentals carriers are willing to put
up with.

Interoprability
Great. Its required. But they don't
define what it really means. Everyone meets
this in their own mind.






optical_man 12/4/2012 | 10:48:31 PM
re: Cisco Eyeing Sonus skeptic,
your comment:
"Of course not mentioned is reordering.
If packet reordering is an issue, Juniper gets
an "F"."

Please explain. I am aware of the debate on packet reordering, and I've heard from both the Juniper rep, as well as the 9 Cisco guys I deal with on this. I'm thinking that it's a non issue (sortof like ATM is gtd, but packet is best effort, but I like packet better).
Do you have some insights that may enlighten me more?

optical_man 12/4/2012 | 10:48:31 PM
re: Cisco Eyeing Sonus ""Author: LightMan Number: 71
Subject: Re: 2002 Core IP router requirements Date: 3/12/2002 11:23:47 PM
Don't know if I follow you. While I agree that the info is high-level, I think it provides a useful datapoint which vendors can use to directionally assess their product fit. Granted, it would be better if they delineated their sources and questions, (probably could get it) but my take is - I'll take what info I can.
Not really a counterpoint - just a follow-on. What is interesting is that it appears that they are going to have trials to see how they meet what they have interpreted as carriers needs.
So given the vendors at large, who do you think meets this criteria the best?""

Lightman,
OK, you're doing the softsell on your website, www.thesoftwareprompt.com. Every one of your messages has the same non committal tone to it.
This last one is great! Right out of a marketing slick:

"..it provides a useful datapoint which vendors can use to directionally assess their product fit"

Please explain what the heck that means? A quick question: What is a "datapoint" anyway? Is it a point on a chart, or is it a silly word t make one sound Perfeshenial.

Coupled with your last comment " given the vendors at large, who do you think meets this criteria the best?"

You seem to pose that question each and every time, in varying forms. Something for us to think about and visit your site to answer?
Please stop. I learn a lot while I'm here, and your softsell is getting on my nerves (take it from a professional sales weenie).
Thanks!!
LightMan 12/4/2012 | 10:48:32 PM
re: Cisco Eyeing Sonus Don't know if I follow you. While I agree that the info is high-level, I think it provides a useful datapoint which vendors can use to directionally assess their product fit. Granted, it would be better if they delineated their sources and questions, (probably could get it) but my take is - I'll take what info I can.

Not really a counterpoint - just a follow-on. What is interesting is that it appears that they are going to have trials to see how they meet what they have interpreted as carriers needs.

So given the vendors at large, who do you think meets this criteria the best?

LightMan
http://www.thesoftwareprompt.c...
optical_man 12/4/2012 | 10:48:40 PM
re: Cisco Eyeing Sonus Author: Wowwo2 Number: 69
Subject: Of course you didn-¦t post that : Date: 3/12/2002 1:47:06 PM
http://www.siliconinvestor.com...
Click , compare and
ROTFLMAOOOOOOOOOOOO!!!

wowwow,
take it over to yahoo.
please keep it to technology and executive moves/adds/changes (MAC's).
btw, it rotflmaooo... a signaling technique or a ietf protocol?
Wowwo2 12/4/2012 | 10:48:41 PM
re: Cisco Eyeing Sonus http://www.siliconinvestor.com...

Click , compare and

ROTFLMAOOOOOOOOOOOO!!!
skeptic 12/4/2012 | 10:48:41 PM
re: Cisco Eyeing Sonus
The document from BTexact while useful, is
a high level set of requirements for a core
router. Its not a detailed set of requirements
or anything that vendors should be claiming
conformance with.


Wowwo2 12/4/2012 | 10:48:43 PM
re: Cisco Eyeing Sonus Warning !!! The poster John is who wrote the NTOP ADIR post is a well known documented and proven liar also known as Hawaii60 or Hawaii60_60 from the IDT & NTOP Yahoo,SiliconInvestor and RagingBull messageboards.He is a 24/7 paid pumper on IDT & NTOP! Do your DD on this guy !
You were warned !

john 12/4/2012 | 10:48:43 PM
re: Cisco Eyeing Sonus Documented liar.

I have no idea what you are tlaking about but you must be short ntop, a weirdo or some sort of hate monger.

Take it somewhere else.
steve 12/4/2012 | 10:48:44 PM
re: Cisco Eyeing Sonus Thanks optical_man, that was very helpful,
balto
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