Corvis Spikes on DISA Talk
Today the market bubbled with speculation about which public networking companies will get a piece of the large networking shopping spree by the U.S. federal government's Defense Information Systems Agency. At the heart of the project is a request for proposal (RFP) for a project known as Global Information Grid Bandwidth Expansion (GIG-BE).
Last Friday, the long-awaited RFP from DISA went public (see DISA Deal D-Day Approaches). Today, the stock boards built into a frenzy .
Single-digit midget Corvis Corp. (Nasdaq: CORV) rocketed up 23 percent, closing up $0.27 to $1.45, on talk that it had won a substantial piece of the DISA RFP. Cisco Systems Inc. (Nasdaq: CSCO), also the topic of DISA rumors, rose $0.34 (2.09%) to $16.62.
Much of the speculation took place here on the Light Reading message boards, where Corvis fans fired off victorious messages about how they'd already won the deal.
As speculators were busy snapping up shares, however, some anti-speculators made some telling points: The RFP has just been opened up to the public, and therefore, in theory, the field is still open.
In addition to Corvis and Cisco, hopefuls for the DISA deal include Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Ciena Corp. (Nasdaq: CIEN), Juniper Networks Inc. (Nasdaq: JNPR), Lucent Technologies Inc. (NYSE: LU), Nortel Networks Corp. (NYSE/Toronto: NT), Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA), and Sycamore Networks Inc. (Nasdaq: SCMR).
At any rate, the speculation does appear to be premature. Government contracts often involve a long and complicated process, and the bidding process will be rigorous because of the nature of publicly funded government work.
Many analysts have yet to see a clear winner. Merrill Lynch & Co. Inc. analysts Tal Liani and Simon Leopold on Tuesday issued a research note on the DISA RFP, based on a conversation they had with Corvis VP of engineering and CTO of government products David Smith. "Contenders include nearly every vendor imaginable," says the Merrill note. "Because GIG-BE is a typical government RFP... we expect this will infuse complications and delays. More importantly, we do not expect contract awards until late 2003." Corvis officals said they do not comment on stock price movements.
— R. Scott Raynovich, US Editor, Light Reading