Riverstone Wins Over Spanish PTT

Riverstone Networks Inc. (Nasdaq: RSTN) announced today that Telefònica de España, Spain's incumbent provider and a subsidiary of Telefònica, one of the largest incumbent carriers in the world, will deploy Riverstone's RS family of routers as part of its broadband rollout in Spain (see Telefònica Picks Riverstone).

The nationwide deployment, called e-Broadband Access, will deliver Ethernet services including Layer 2 MPLS virtual private networks to enterprise customers throughout 12 cities in Spain.

Riverstone hasn’t disclosed the amount of the contract. But analysts expect it to generate between $3 million and $10 million over the next several quarters. Some of the RS 38000 and RS 8600 products are already running live traffic in test networks, but they have not yet been widely deployed, says Andrew Feldman, vice president of marketing for Riverstone.

Considering the revenue slump Riverstone has endured over the last several quarters, a new win from such a large and well respected carrier is big news. For the second fiscal quarter of 2003, the company reported revenues of $10.7 million, compared with $30.1 million for the previous quarter and $55.3 million for the same period last year (see Riverstone Reports Q2).

“This win is clearly a positive for the company,” says Sam Wilson, an analyst with Merrill Lynch & Co. Inc. “Telefònica is a notable service provider in Europe. It’s a good contract.”

Not only is Telefònica a major carrier, which makes it a significant win, but it’s not in Asia. In the past three months, Riverstone has announced seven new contracts, including this one. Four of them have been in Asia: PCCW in Hong Kong, Hanaro Telecom Inc. and Powercomm Corp. in Korea, and the city of Okinawa in Japan.

“Riverstone really needs customer diversification,” says Wilson. “It’s nice to see them get business in another region of the world, particularly Europe.”

This announcement is also interesting because Telefònica de España is using the Riverstone gear to provide Layer 2 MPLS VPNs. Multiprotocol Label Switching (MPLS) is a hot topic lately, with Layer 2 VPNs at the forefront of the hype (see MPLS VPNs: The Talk of Supercomm). But it’s still very early days for the technology, and incumbent carriers in the U.S. haven’t started deploying it. Still, Riverstone seems to be making a name for itself in the MPLS market. The company has shipped over 8,000 MPLS ports worldwide to customers such as PCCW, Neosnetworks, Dacom Corp., Optynex Telecom S.A. and Utfors AB.

”This is one of the first Ethernet-based Layer 2 MPLS VPN deployments in Europe,” says Mark Bieberich, senior analyst at Yankee Group. “For Riverstone to be selected to lead this deployment is a validation of its technology, and it gives them a chance to get into other Telefònica networks throughout the world.”

It’s also important to note that Riverstone beat out Cisco Systems Inc. (Nasdaq: CSCO), the incumbent routing vendor in that network, for the deal. According to Riverstone, it was the only vendor awarded a contract based upon the RFP (request for proposal) for the metro core and metro aggregation.

“Any time the incumbent routing vendor is beaten in an account, it’s significant,” says Bieberich. “Cisco has about 65 percent of the edge router market. So this is a big deal.”

Cisco had not returned calls before press time.

— Marguerite Reardon, Senior Editor, Light Reading
www.lightreading.com Movers and shakers from more than 100 companies – including Riverstone Networks – will be speaking at Lightspeed Europe. Check it out at Lightspeed Europe 02.

Iipoed 12/4/2012 | 9:26:59 PM
re: Riverstone Wins Over Spanish PTT Great Riverstoned beats out Cisco. When you buy the business what else can you say. L2, heck you could get some 3com corebuilders. How much longer can a company stay in business when they lose $$ on every deal?
At least they are still meeting their payroll and in these times that is good news. Thanks cabletron for keeping the no margin business going.
metroman 12/4/2012 | 9:26:57 PM
re: Riverstone Wins Over Spanish PTT Finally you come out of the closet... you must be a Spanish Cisco employee.... Ha ha ha.

People should take a look at gross margins in the company accounts for the facts rather than a from bitter old pill like you.

And you should take your information to the SEC if you have any facts to back up your arguments. And if you think that Telefonica did not check Riverstone out thoroughly before placing the business then you insult them. They are one of the largest incumbent PTTs in the world you know!

Otherwise, good on you Riverstone a technology vindication.
Iipoed 12/4/2012 | 9:26:52 PM
re: Riverstone Wins Over Spanish PTT no actually I competed against Crisco for 6 years. But lets face it who in their right mind would choose Riverstoned over Cisco when pricing is not the issue.I can just about assure that Cisco was twice as much as the price Riverstone was willing to sell their reengineered cabletron stuff for. Do you honestly think there are anywhere more than 10% margins on this deal. Its just like the old days with Cabletron, buy the business and try to recoup on the service and support end.
lucifer 12/4/2012 | 9:26:51 PM
re: Riverstone Wins Over Spanish PTT Lightreading and Riverstone do it together!

1. My amigos tell me that is not the big deal that the article and the PR make it out to be. It's the sale of a trial network, that Telefonica has been testing for over a year.

2. Also hear that Telefonica has not awarded their BIG metro ethernet deal yet; contender are Riverstone, Nortel and - yes! - Cisco.

Funny how Riverstone announced their new focus on Enterprise and yet we see lots of "fluffy" PR on carrier business. Who's not talking??

Anyone in the know?

BobbyMax 12/4/2012 | 9:26:34 PM
re: Riverstone Wins Over Spanish PTT There are many many vendors that supply the same equipment that Riverstone supplies. It is very strange that a large carrier such as Telefonica would buy from a small vendor. Carriers all over the world buy from large carriers because of their stable business and excellent customer support.
chitgo 12/4/2012 | 9:26:32 PM
re: Riverstone Wins Over Spanish PTT Ha Ha !! Why don't you appreciate the fact that Riverstone beat Cisco? Yes, Riverstone would have worked on low margings. Still, it's a significant win. It's important that vendors like Riverstone etc.. stay afloat. Otherwise customers will be forced to buy Cisco gear (not by choice but by force) at list prices. Give it a thought.
beowulf888 12/4/2012 | 9:26:31 PM
re: Riverstone Wins Over Spanish PTT It's simple. Lucent may very well be in its death throws. Nortel is in a bad way. Alcatel is a study in pain, too. Only your hated Cisco remains, Bobby ;-)


BM wrote:
"There are many many vendors that supply the same equipment that Riverstone supplies. It is very strange that a large carrier such as Telefonica would buy from a small vendor. Carriers all over the world buy from large carriers because of their stable business and excellent customer support."
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