AlcaLu Grabs Verizon Deal
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