Springtide Ebbing Away?
"I think that is actually one of the areas they will cut," says Hasan Iman, telecom equipment analyst at Thomas Weisel Partners. "Lucent has never been really big on data networking."
"Springtide is definitely high on my list of candidates to cut," agrees Lehman Brothers analyst Stephen Levy. "Lucent wrote off most of the goodwill related to Springtide last quarter."
"The next level of cuts [at Lucent] aren't going to be broad based," explains Iman. "They're going to have to start cutting divisions."
This is because Lucent, along with other vendors such as Ericsson AB (Nasdaq: ERICY) and Nortel Networks Corp. (NYSE/Toronto: NT), need to slash cash burn rate, and, as Iman sees it, only chopping divisions will, er, cut it.
A Lucent spokesman told Unstrung that the company does not comment on rumor and speculation (the old story…). However, he did say that the company is evaluating the Springtide product line. "We'll let you know," he says.
So that's encouraging…
However, the wireless market is still extremely important to Lucent, and the ebbing of Springtide could leave the firm with a big partner-shaped hole in its product line. Cisco Systems Inc.'s (Nasdaq: CSCO) 6500 and 7200 wireless routers (see Cisco's Wireless Wait) might be a natural fit for that hole, suggests Iman.
"I think a logical fit for them would be Cisco," says Iman. "Because some of the other major players have already allied with Juniper."
Indeed, It was Ericsson's move to develop the J20 wireless router with Juniper Networks Inc. (Nasdaq: JNPR) that helped to break the taboo that operators should source all of their wireless network equipment from one supplier.
"There are alternatives that Lucent could just integrate from third parties," agrees Levy.
Indeed there are. As well as IP networking players like Cisco and Juniper, there are a slew of startups out there that would be happy to have Lucent's business if it does decide to can the Springtide line (see Having a Flutter on the GGSNs).
If Lucent does drop Springtide, that will mean the failure of another of its major acquisitions of the last few years. Lucent bought Springtide -- the company -- in 2000 for $1.3 billion.
For those of you at the back that haven't been paying attention, wireless routers are the kit that help to enable all fancy-pants wireless data services promised with the coming of next-generation networks. Also known as GPRS Gateway Support Nodes (GGSNs) and Packet Data Serving Nodes (PDSN), they are the primary interface between a carrier’s radio and packet core networks. In their next-gen guises, these wireless routers comprise a new class of equipment that adds sophisticated service creation, billing, and IP traffic management capabilities to this strategic point in the network (see What's the Wireless Router Market Worth? for more details).
— Dan Jones, Senior Editor, Unstrung