Ethernet equipment

AlcaLu Grabs Verizon Deal

Alcatel-Lucent (NYSE: ALU) has reportedly beaten out Juniper Networks Inc. (NYSE: JNPR) for an Ethernet services contract at Verizon Enterprise Solutions .

The deal could be worth $150 million at first, according to analyst Simon Leopold of Morgan Keegan & Company Inc. , who reported the Verizon deal in research notes published this morning.

Specifically, he thinks Verizon chose AlcaLu's 7450 Ethernet Service Switch over Juniper's MX series. AlcaLu, Juniper, and Verizon couldn't immediately be reached for comment.

Leopold also believes Juniper won a deal earlier with AT&T Inc. (NYSE: T), supplying gear for the carrier's Optiman AC network for Ethernet services. (Which would be a big deal; Juniper hasn't been a big supplier to AT&T.)

But he's highlighting the AlcaLu deal because he thinks AlcaLu's Ethernet presence is putting hard pressure on the competition. He's also using the deal as evidence that the carrier IP business -- born when Alcatel acquired TiMetra almost exactly six years ago -- has grown to an importance that Wall Street apparently ignores.

"We suspect the Street does not appreciate the value of Alcatel-Lucent's data networking unit," Leopold writes.

Here's why. By Leopold's figures, AlcaLu's IP unit will have revenues of around $1.73 billion this year. If one values the group at three times its sales, then it's worth $5.2 billion -- 75 percent of AlcaLu's enterprise value, for a division that's only 9 percent of the company's sales. And Leopold figures the division will grow 14 percent in 2010.

Leopold goes on to quote Ovum RHK Inc. research putting AlcaLu in second place in edge routing, with 18 percent market share, behind (guess who?) Cisco Systems Inc. (Nasdaq: CSCO) at 42 percent. Juniper came in third with 16 percent.

That second-place spot has shifted between AlcaLu and Juniper for some time, with different research firms sometimes giving different answers depending on how they define the edge-routing category.

— Craig Matsumoto, West Coast Editor, Light Reading

optiblues 12/5/2012 | 4:00:06 PM
re: AlcaLu Grabs Verizon Deal

Is there any word on the reasoning why AlcaLu won this business from Juniper?  Was it based on IP feature set, better pricing, network integration, IPoDWDM integration?

It seems that Juniper is already a solid vendor for Verizon, but I don't know if this was the first attempt for Juniper into this more Metro carrier IP space.

gottappp 12/5/2012 | 4:00:05 PM
re: AlcaLu Grabs Verizon Deal

Nortel Wins PBB Deal With Verizon

June 11, 2008


Nortel Files for Bankruptcy Protection

Jan 14, 2009


Think Verizon maybe found a plan B? 

No wonder so little information was leaked to the analyst and press - sloppy seconds to Nortel PBB is sooo 2008 :)  Better to let the press fill in the blanks assuming technology with broader market appeal. 

This is reportedly a huge Juniper loss.  But where's Cisco in all this press coverage? Aren't they the 800 lb Carrier Ethernet gorilla?  Isn't there an available Cisco platform to update all those aging 6500 switches in the market?  Amazing that this situation that pitted two lesser rivals against each other isn't portrayed as a major loss to the market leader.  Isn't the bigger story the glaring absence of Cisco?

And who exactly was the incumbent switch vendor in this Verizon network?  Juniper? Unlikely as they've just entered the CarrierE market over the last 2 years. Had to be something older with scaling issues - that's what prompted the need for PBB in the first place, according to the first Nortel article.  800lb gorilla maybe?  

Pete Baldwin 12/5/2012 | 4:00:00 PM
re: AlcaLu Grabs Verizon Deal

Gottappp -- I've similarly heard (from just one person, inconclusively) that this might be a PBB-related deal.  In which case, it makes some sense Cisco isn't in contention.  A bigger story would be some kind of MPLS build that avoids Cisco.

Pete Baldwin 12/5/2012 | 3:59:58 PM
re: AlcaLu Grabs Verizon Deal

Looks like the deal isn't sealed after all:


"Verizon Deal's Not AlcaLu's, Yet"

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