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Optical/IP

Panditi Goes Soft

Softswitch maker Convergent Networks Inc. could be positioning itself for a run at the IPO market -- again. Today the company named Surya Panditi, the man who led Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) through its $200 million initial public offering, as its CEO (see Panditi to Helm Convergent and Avici and Corvis Make Stunning Debuts).

Panditi, who officially stepped down as Avici’s CEO in July (see Avici Shuffles Top Execs), will continue as the IP routing company’s chairman of the board while taking on his new responsibilities at Convergent. Panditi says that nothing will change at Avici. Steve Kaufman, who took over the CEO job from him, has slowly taken over the day-to-day functions of running the company as Panditi’s role in those areas has faded.

"I’m still involved with customers to the extent that they want to talk to the chairman,” he said in a telephone interview. “But I’ve slowly been turning over responsibilities to Steve Kaufman.”

As for Convergent, Panditi is ready to take on the challenges ahead, which could include an IPO. This would be the second time that Convergent would shoot for the public market. It pulled its initial registration with the Securities and Exchange Commission last March, citing poor market conditions (see Convergent Pulls IPO ).

“It’s too early to say anything specifially; I just started,” he said. “But I will say that I am very excited about the prospects for the company. And it would be exciting to go through another IPO. Not many people have done two of them, and I’d like to be one of them.”

Analysts following the space, say that Panditi’s joining is positive for the company.

“Convergent gains a few things from Surya,” says Mark Sue, an analyst with Frost Securities Inc.. “He has experience in bringing a startup through an IPO. He also has an institutional following and a good technical background.”

But the road ahead is a bumpy one. Not only is the company competing with other vendors making similar equipment, like Sonus Networks Inc. (Nasdaq: SONS), but it is also competing with the legacy Class 4 and Class 5 voice switches from companies like Nortel Networks Corp. (NYSE/Toronto: NT) and Lucent Technologies Inc. (NYSE: LU) that are the fundamental building blocks of the modern voice network.

What’s more, many of the potential early adopters of voice-over-IP technology, such as Level 3 Communications Inc. (Nasdaq: LVLT) and Global Crossing Ventures, are in serious financial trouble and have slashed spending (see What's Next for GX? and Carriers at Risk). As a result, Convergent and others in its sector must now focus on traditional incumbent carriers. One daunting hurdle is the arduous and costly certification process. Sue predicts that the market is still at least a year out, with the majority of spending on softswitches not expected to really kick in until around 2004.

“This is still a very young market,” he says. “No one knows for sure when the market will take off. The question is, do these companies have the balance sheet to wait it out?”

Some, like New Jersey-based Tachion Networks, have already run out of money(see Tachion Trolls for Cash). But Panditi says Convergent is well positioned to weather the storm until the market fully develops. To date, the company has raised $134 million in funding and has spent it sparingly, with its headcount currently capped at around 200 employees. With some products already shipping for revenue, Panditi says the company has enough cash for 2002, and he doesn’t anticipate raising another round this year.

While Panditi’s first IPO was a great success, Avici has by no means flourished since going public. Today, as it struggles to win new contracts, its stock is trading at around $3 a share, far from its first day, which saw prices as high as $94. The bankruptcy of Enron Broadband Services Inc. and the cutbacks at Williams Communications Group (NYSE: WCG), both major customers, have not helped the company either (see Enron's Empty Bandwidth). Despite its claims of over 13 customers worldwide, analysts are still skeptical, as the company continues to report losses (see Avici Losses Increase).

“From an investment perspective, it’s a show-me stock,” says Samuel Wilson, an analyst with Merrill Lynch & Co. Inc. “We have a Neutral on it, and we tell investors not to buy it right now; it’s high risk."

But Wilson adds that Avici’s woes are not a reflection of poor leadership. Instead, he blames the sagging core router business in general. Hopefully, Panditi’s track record will improve for Convergent’s sake.

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com
opticguy 12/4/2012 | 11:06:11 PM
re: Panditi Goes Soft It will give Mrs. Panditi a heart attack when she reads the Lightreading headline. !!!!!!!
HarveyMudd 12/4/2012 | 11:06:10 PM
re: Panditi Goes Soft Forst of all thevera softswitch is over. The replacement of Class 5 or Class 4 switches will not be replaced by Softswitches. The era ofVC propoganda is over. The VCs have no control over primary carriers and can not influence.

If a carrier decides to buy softswitches, it would be from vendors like Lucent/Norterl who has immense experience in netwoking and technology.
HarveyMudd 12/4/2012 | 11:06:08 PM
re: Panditi Goes Soft









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First of all the era of softswitches is over. Class 5 or Class 4 switches will not be replaced by Softswitches. The era of VC propoganda on softswitches is also over. The VCs have no control over primary carriers and can not influence the market and push the softswitch products.

The softswitch vendors will gone one by one.


















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Subject

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Forst of all thevera softswitch is over. The replacement of Class 5 or Class 4 switches will not be replaced by Softswitches. The era ofVC propoganda is over. The VCs have no control over primary carriers and can not influence.

If a carrier decides to buy softswitches, it would be from vendors like Lucent/Norterl who has immense experience in netwoking and technology.




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Copyright -¬ 2000-2002 Light Reading, Inc. - All rights reserved.

Privacy Policy Terms of Use Editorial Disclosure
iptwister 12/4/2012 | 11:06:06 PM
re: Panditi Goes Soft Harvey Mudd,

Please correct your spelling, grammar, and style and we may take you seriously.

As for Panditi going soft, I've met his wife, and she sure seemed happy :-)

-ipt
fgoldstein 12/4/2012 | 11:06:01 PM
re: Panditi Goes Soft The "softswitch" label is becoming meaningless. It is properly applied to little Windows programs that let gateway cards and eyepee phones emulate a Strowger switch across an Ethernet, complete with the dirty contact noise. And to the grown-up cousins of same, which use Unix servers to route bulk calls.

But Convergent has a real switch. It has real customers handling serious traffic volumes. The Convergent box is an ATM/Circuit switch. Now like all newfangled switches, some of the logic is internal, some external. The base box doesn't have all the features you want. Convergent sells an applications processor that adds them. That's also called a "softswitch" today. It is a nice way to separate the most critical real-time functions (microcode/embedded) from the less critical, more flexible feature code that goes into the external box.

Lucent and Nortel seem too worried about cannibalizing their own big iron, which ILECs buy by the ton. So Convergent, Sonus and other upstarts have a good chance at surviving the long term. But I don't have much hope for vendors who think that a PCI card in a Compaq server is a substitute for a real switch.
netgenius 12/4/2012 | 11:05:57 PM
re: Panditi Goes Soft To replace the legacy switches (cap and grow) is not that big of a deal....But, a major problem that softswitch vendors will have to face is that of backoffice support for their new devices in the service provider network. Only soft switch vendors that makes their soft switch look and feel exactly like a DMS or ESS from a back office perspective will have a snowballs chance at challenging the incumbants. (Santera is one example--their box can be supported with almost the same backoffice support as the DMS250. Not suprising given that most of their people come from Nortel.)

Convergent has a good box but where do they fall in this backoffice support picture?
t4e 12/4/2012 | 11:05:37 PM
re: Panditi Goes Soft What I've seen is that none of these softswitch guys - Convergent, Unisphere (Castle), Sonus to name the big three - have much experience with backoffice integration. What you see in their product literature and sales pitches are statements like "we generate a CDR format which can be easily converted to BAF". As it turns out it was anything but easy!
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