ATLANTA -- Unisphere Networks Inc. is close to landing an edge router contract valued in the hundreds of millions of dollars with Verizon Communications Inc. (NYSE: VZ), according to sources close to both companies.

Such a contract would provide yet another reason why router maker Juniper Networks Inc. (Nasdaq: JNPR) got hungry to buy Unisphere -- and was willing to part with $375 million in cash to do so.

But Unisphere adamantly denies the story. "There is no deal to announce," says a Unisphere spokesperson. "Your information is wrong."

Talk of such a deal was circulating on the show floor here at Supercomm 2002. One source, citing contacts at the large East Coast RBOC, says it's a serious deal and very close to happening.

”The contract could be big enough to pay for Juniper’s purchase of Unisphere,” says the source, who requested anonymity. A separate source at Unisphere confirmed that a hefty RBOC (regional Bell operating company) contract would be announced shortly but wouldn’t name the customer.

If the deal is real, it could earn back some of the cash that Juniper will expend if its planned purchase of Unisphere goes through. It would be especially helpful, of course, if such a deal amounted to hundreds of millions of dollars. Juniper announced late last month a deal to buy Unisphere in a deal worth about $740 million, with $375 million of that coming in the form of cash (see Juniper Nabs Unisphere for $740M). The deal is expected to close in the third quarter of this year.

A big contract with Verizon would also give Juniper another beachhead in an RBOC, the most coveted of carrier customers.

Verizon had not returned calls at press time.

— R. Scott Raynovich, US Editor, Light Reading
http://www.lightreading.com