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Optical/IP

Unisphere Close to $200-300M Deal?

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
Lancelot Lightwave 12/4/2012 | 10:15:30 PM
re: Unisphere Close to $200-300M Deal? Heard that Unisphere is replacing Cisco 6400s and Redbacks in Verizon...
stavvmc 12/4/2012 | 10:17:44 PM
re: Unisphere Close to $200-300M Deal? Morgan Stanley analyst David Jackson had a note out on June 3 about the Unisphere contract win, so that's one source. Since the note doesn't mention a size, it's safe to say that LR had at least one other source, or else the $200-300m amounts to thumb sucking, which is an unlikely scenario given its prescience on other matters Unisphere related. Jackson reckons the contract is for SMS, so a negative for RedBack and a "non-event" for Cisco.
asmo 12/4/2012 | 10:17:49 PM
re: Unisphere Close to $200-300M Deal? E4+ does Extended Access Lists, CAR rules, packet coloring and Traffic shaping at line rate.

The ISE cards are OC-48 cards (STM-16) that perform similar features at line rate. All these cards are shipping NOW. What hardware does Juniper have that performs these features at line rate?

I keep reading all the FUD about Juniper having a better core router, show me the figures and IGÇÖll believe it.

As much as some people like to avoid the fact but building a core router is a really difficult thing to do. I give every credit to Juniper and the people that work for them to where they have got today. I donGÇÖt mean to disrespect the guys that have managed to create a competent core router.

In the cold light of day compare the figures to see which router has better line rate performance when multiple features are turned on, and doesnGÇÖt scramble your video stream by re-ordering packets.

Juniper was the first to bring out 10G line cards, a great accomplishment by their engineers! Cisco came out later with a better solution that didnGÇÖt require a forklift and ate JuniperGÇÖs lunch. Check the latest OC-192 market ownership figures if in doubt.

Juniper came out with a 40G per slot solution, a great accomplishment, no buyers yet but great from an TTM engineering perspective! Cisco came out later withGǪGǪ

Hey I know this GÇ£mine is bigger than yoursGÇ¥ conversation is a bit childish, but it's just a bit of fun after all ;)

Asmo
mbledug 12/4/2012 | 10:17:49 PM
re: Unisphere Close to $200-300M Deal? Which RBOC is using Cisco's edge router?

Mbledug
russ4br 12/4/2012 | 10:17:53 PM
re: Unisphere Close to $200-300M Deal? AAL5 wrote:

I hate to be put in the position of defending the "Big C", but how exactly are Juniper's products better than Cisco's?
(...)
- Perhaps it is the fact that when you turn any sort of feature on the M160 (ACLs etc.), your performance goes to hell? OC-48/192 line rate with loads of edge features, not a chance in hell.


Well, I hate to be put in a position of defending the "Big J", but a.f.a.i.k. Cisco doesn't even _claim_ to support access-list input/output or rate-limiting at all in their "high-performance" Engine 4 cards ... let alone claiming "line-rate" with features ... unless they've finally got their 3rd - or is it 4th? - version of the Engine-4 card right this time ... oh, yes, I've almost forgot ... they have those "powerful" STM-4 ISE cards, my goodness!!!

- russ

lvezz 12/4/2012 | 10:17:58 PM
re: Unisphere Close to $200-300M Deal? Anyone remember Arrowpoint? Cisco had to be in talks w/them before IPO but waited, much to their dismay. Deal or no deal: Unisphere is cheaper a few weeks ago than than will be. Juniper may have bet at the perfect time; just ask John C.
AAL5 12/4/2012 | 10:18:00 PM
re: Unisphere Close to $200-300M Deal? BobbyMax (aka Harvey Mudd aka Verbal-Diarrhea-Man),

Hey you actually said something that might be true, regarding Unisphere and market share. Unfortunately you messed up your potential home-run by spouting you usual 'I hate Cisco and the world line'.

I hate to be put in the position of defending the "Big C", but how exactly are Juniper's products better than Cisco's?

- Is it the fact that the M160 has a screwed architecture that means it has out of order packet problems? I know of a couple of big carriers that are going to remove M160s because of this problem.

- Perhaps it is the fact that when you turn any sort of feature on the M160 (ACLs etc.), your performance goes to hell? OC-48/192 line rate with loads of edge features, not a chance in hell.

- Maybe its the well known head of line blocking problems that exist in the M160?

I'm not saying there aren't issues with IOS, but Juniper has a more fundimental problem, their hardware architectures have been designed for time to market first, over an architecture that is extendable and supports edge like features on a core router at line rate. I'm not even going down the route of the fork-lift truck issue, that has been done to death.

Regarding you insightful comments regarding California, as mentioned before you should resolve your hate and anger problem with your therapist. You did take my advise the last time and actually get one didn't you?

AAL5

BobbyMax 12/4/2012 | 10:18:00 PM
re: Unisphere Close to $200-300M Deal? The acquisition of Unisphere is indeed a very good deal for Juniper. Unisphere has been very successful in gaining market share from Cisco. On the contrary, Juniper has lost market share to Cisco. Also some of the Juniper's routers have not been successful in the market place. It should be mentioned that Juniper's products are much better in quality than Cisco.s products. Cisco resisted fair evaluation of its products. Many of the claims made by Cisco regading its product performance.

The marriage between Juniper and Unisphere would be successful if Juniper does not impose the California culture (which unfortunately is very similar to the cultures of many third world countries)on Unisphere. They should also not interfere with the marketing efforts of Unisphere.
mbledug 12/4/2012 | 10:18:06 PM
re: Unisphere Close to $200-300M Deal? Whose edge routers has Verizon been using up to
now? Cisco?

Mbledug
Route495 12/4/2012 | 10:18:06 PM
re: Unisphere Close to $200-300M Deal? Verizon uses lot of LU equipement.
According to this report Unisphere has
a good shot of getting the deal.
What happened to other startups like WaveSmith in the edge space?
gea 12/4/2012 | 10:18:08 PM
re: Unisphere Close to $200-300M Deal? "A flat-out denial means nothing, however, except that the parties involved are covering their exposed buttocks since they can't officially say anything without risking the SEC's unwanted attention."

I would guess that the real reason for denial here is that people don't start buying up Siemens stock in order to get some leverage into the buyout. If they did, the stock price would go up and make the deal much less attractive.

William F. Letcher 12/4/2012 | 10:18:10 PM
re: Unisphere Close to $200-300M Deal? the Unisphere denial is more strongly-worded than I would have thought if there was in fact a deal. on their track record for reporting rumors, in past instances Light Reading has scooped a real story, and other times they have come up empty. so time will tell...

JudasPriest 12/4/2012 | 10:18:10 PM
re: Unisphere Close to $200-300M Deal? Scott must have a great deal of faith in his source to go out on a limb like this. I'm sure he didn't come upon this information after bumping into a booth babe at the bar at Jock & Jill's.

We can speculate as to whether this rumor is based in fact or fiction, but I'm willing to bet that Scott's source is somewhat credible. LR may be known for its irreverence, but I've not known them to go this far out without having some level of sincere confidence in the source.

That said a $200-300M deal this close to an announcement that Unisphere is being bought for $750M raises a great many questions.

Did Juniper have negotiations with Verizon underway, but needed Unisphere to close a long-term deal?

Why would Siemens spin out a company for that kind of money if they knew there was a deal imminent? Was Siemens the roadblock, and the only way for them to cash was to get the money via a Juniper sale?

Time will tell. A flat-out denial means nothing, however, except that the parties involved are covering their exposed buttocks since they can't officially say anything without risking the SEC's unwanted attention.

whatajokeshareoptionsare 12/4/2012 | 10:18:10 PM
re: Unisphere Close to $200-300M Deal? What I hear is that the deal is real, but Juniper was not an incentive but a problem after the fact.
Route495 12/4/2012 | 10:18:11 PM
re: Unisphere Close to $200-300M Deal? Verizon likes to choose the most promising big boy and the most promising startup and let them duel it out in the final showdown. Unisphere was most probably the best prospect among the startups but no carrier/rboc would touch a startup unless they have a big boy support (which could explain why Unisphere sold out to Juniper). Juniper got a foot in the door as it was most probably not getting in thru the other category.
whatajokeshareoptionsare 12/4/2012 | 10:18:11 PM
re: Unisphere Close to $200-300M Deal? just wanted to correct the spelling
whatajokeshareoptionsare 12/4/2012 | 10:18:11 PM
re: Unisphere Close to $200-300M Deal? your reply begs the question is it possible to manipulate perception in these boards , I believe the rumour that Juniper was buying Unisphere first appeared here and was denied by a Unisphere spokeperson
raid 12/4/2012 | 10:18:12 PM
re: Unisphere Close to $200-300M Deal? Perhaps, we need to treat this as just another rumor.

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

Normally, the company would just say we don't respond to rumors. Here, they are clearly stating that "your information is wrong". My read is that the rumor has no merit. Hopefully, I am absolutely and completely wrong!
whatajokeshareoptionsare 12/4/2012 | 10:18:12 PM
re: Unisphere Close to $200-300M Deal? Siemens was the service and support footprint before the buyout, you don't seriously consider Juniper a safe pair of hands like Siemens or Nortel as percieved by the voice proletariate(sp?)
steve 12/4/2012 | 10:18:13 PM
re: Unisphere Close to $200-300M Deal? Juniper must have know the deal was coming and the value of the contract was baked into the price paid for Unisphere. Also, Juniper must have gotten comfortable that Verizon would honor the contract with a new owner, otherwise there could be a clawback of the sales price. (if Juniper had a decent advisor that is how it should have been structured). As for the Unisphere employees, would rather be holding Juniper options than Siemens or Unisphere options.
optically_speaking 12/4/2012 | 10:18:13 PM
re: Unisphere Close to $200-300M Deal? perhaps not only was Juniper comfortable that verizon would honor the contract, the merger might have been a prerequisite of signing the contract...Verizon certainly would be more comfortable with a contract this size given the larger service and support footprint of Juniper -
diag_eng 12/4/2012 | 10:18:15 PM
re: Unisphere Close to $200-300M Deal? It is probably a multi-year deal. In any event it is nice to see an RBOC spending money again.

If the xLEC's who've gone out of business have accomplished anything (since the '96 Telecom Act), it was getting the RBOC's to spend money.

whatajokeshareoptionsare 12/4/2012 | 10:18:15 PM
re: Unisphere Close to $200-300M Deal? The real question is how willing is Verizon to honour a deal that was made with Unisphere, now that Unisphere no longer exists, what kind of relationship does Juniper have with Verizon
Lightmare 12/4/2012 | 10:18:17 PM
re: Unisphere Close to $200-300M Deal? No, really, this is a big deal!

So if its this big of a deal, why the hell did unisphere sell out?

1. This could give them more revenue than jnpr this year
2. it could send them into ipo land
3. if they closed the deal with verizon and then went to sell the company, they could fetch a much higher price tag

So what the heck gives?

Sounds like jnpr fell into a heap of gold and looks like the employee's of uni get the short end of the shtick - no?
bluemtn 12/4/2012 | 10:18:17 PM
re: Unisphere Close to $200-300M Deal? Siemens would have sold the UniSphere for more if a deal were so close. The RBOCs take 6-12 months of lab and field trials before they buy. Even then a deployment would start out slower than a 200/300 million dollar contract.

To boot, if JNPR were about to get a deal like this and it was leaking on Briefing.com and Light Reading. You would probably see it in the stock price already.

Go figure
zoinks! 12/4/2012 | 10:18:17 PM
re: Unisphere Close to $200-300M Deal? Or is this an even bigger deal for the industry as a whole (assuming that this isn't a 200 year deal at 1M per year)?

Does this signify a potential end of the drought?

Zoinks!
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