AlcaLu's Router Run Continues
Alcatel-Lucent (NYSE: ALU) might have had a disappointing earnings report, but market researchers say the company had a heck of a second quarter on the product front.
Specifically, Ovum RHK Inc. tallied the company's IP/MPLS revenues -- via the TiMetra acquisition, essentially -- at $274 million, up 60 percent from the previous year. And the Dell'Oro Group Group recently came to a similar finding, reporting Alcatel had passed Juniper Networks Inc. (NYSE: JNPR) for second place in the service provider edge router market, with both companies trailing Cisco Systems Inc. (Nasdaq: CSCO), of course.
Dell'Oro showed Alcatel-Lucent growing 85 percent from the previous year's second quarter, compared with Juniper's growth of 23 percent.
(On an interesting side note, Dell'Oro calculates Huawei Technologies Co. Ltd. climbed into fourth place in edge routers, with a second quarter that was 95 percent bigger than last year's.)
The numbers, alongside a top market share in optical for the quarter, give Alcatel-Lucent something to cheer about, following a second-quarter earnings report that showed continued struggles in the mobile segment and a disappointingly low gross margin of around 33 percent. (See Optical Shines in Q2 and Alcatel-Lucent Slumps on Q2 Loss .)
In a report issued last week, analyst Simon Leopold of Morgan Keegan & Company Inc. wrote that the router and optical numbers are "encouraging," calling them trends that "are overlooked as investors focus instead on restructuring issues and near-term product transitions that provide drag on margins."
What's Juniper think of being bumped to No. 3, though? Juniper had no official comment, but it's been hearing that song, in various forms, for a couple of years now. A spokesman pointed out that rankings can fluctuate from quarter to quarter; moreover, the rankings depend on which products are being counted. (See Alcatel Router Revenues Surge.)
Juniper still ranks a clear No. 2 in IP transport, says Mark Seery, an analyst with Ovum-RHK. But he says what's hurt the company on the IP/MPLS edge is its lack of a carrier Ethernet product, since the Ethernet and edge-router markets are so linked.
Juniper is fighting back with the MX960, launched last year to address just this kind of concern. (See Juniper Antes Up on Ethernet (Finally).) The product is just starting to gain revenues, and Seery thinks it will take some "continued evolution" of the product for Juniper to gain steam.
To regain edge market share could take Juniper one to three years, Seery says, assuming no surprises from Cisco, or some smaller player, upend Alcatel-Lucent's or Juniper's plans.
— Craig Matsumoto, West Coast Editor, Light Reading