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.