Optical/IP Networks

Unisphere Wins AT&T Contract

Siemens Information and Communication Networks (ICN), and its affiliate Unisphere Networks Inc., announced today that AT&T Corp. (NYSE: T) has agreed to deploy Unisphere’s ERX family of edge routers in its nationwide network (see AT&T Deploys Unisphere Routers).

Unisphere, which has leveraged its Siemens AG (NYSE: SI; Frankfurt: SIE) connection to win large accounts in Asia and Europe, is now using that same connection here in the U.S.

“Most of our business has been in international markets, which has fueled some skepticism about whether we could win incumbent business here in the U.S.,” says Jim Dolce, president and CEO of Unisphere. “This is confirmation that we can.”

While AT&T and Unisphere are keeping their lips sealed about details of the contract, such as price and duration, an AT&T spokesperson indicated that it could potentially last over several quarters and included several pieces of equipment.

Specifically, Unisphere’s ERX routers will be deployed in various hub locations across the country, many of which are part of the old NorthPoint Communications network that AT&T acquired back in March. AT&T bought the service provider’s assets during bankruptcy proceedings and is using the ERX platforms to provide consumer Internet, voice, and data services directly to consumer and business customers.

“Instead of taking a wholesale approach like NorthPoint, we are going to sell directly to customers,” says Michael Keady, a spokesperson for AT&T. “To do that we needed to buy new equipment to handle subscribers and billing.”

Even if the contract doesn’t amount to much business, some analysts say that announcing a win from a customer like AT&T is still important for Unisphere.

“AT&T is definitely an important customer to have, but they aren’t a major DSL player yet, even though they appear to have ambitions to be,” says Tim Savageaux, an analyst with W.R. Hambrecht & Co. “Most of Unisphere’s traction to this point has been in traditional Siemens strongholds like Europe and Asia, so this is clearly a major breakthrough for them.”

Over the past year, as the company has waited to go public, it has continued to expand its business. Unisphere's net sales for fiscal year 2001, which ended on September 30, 2001, were $185.4 million, compared with $49.6 million for fiscal 2000, an increase of 274 percent, according to the company. Net sales for the fourth quarter of fiscal 2001 were $58.2 million, compared with $53.1 million for the third quarter, a sequential increase of nearly 10 percent.

While Dolce says that sales were equal among all geographic regions, most of Unipshere’s recent customer wins have been in Asia and Europe. For example, earlier this month, Unisphere announced major DSL/broadband deployments in Taiwan (Chunghwa Telecom) and Germany (Deutsche Telekom AG [NYSE: DT]) (see Unisphere Wins Taiwan Router Deal and Deutsche Telekom Goes With Unisphere).

This contract with AT&T will likely have an impact on Unisphere’s competitors, namely DSL aggregation rival Redback Networks Inc. (Nasdaq: RBAK), which has seen strong success among RBOC DSL networks. Analysts say that Unisphere’s AT&T win sends a strong warning to Redback. Just last week the company saw its stock recover slightly and stabilize amid positive third-quarter earnings (see Redback Stock Stages Rally ).

“Clearly, this isn’t great news for Redback,” says Conrad Leifur, an analyst with U.S. Bancorp Piper Jaffray. “But out of all the problems that Redback is having right now, I’d say this one ranks about 50th.”

— Marguerite Reardon, Senior Editor, Light Reading
freethinker 12/4/2012 | 7:42:38 PM
re: Unisphere Wins AT&T Contract Multiple filer for IPO, but not yet public, so the UNSP/Nasdaq reference is probably not appropriate.
Ainata 12/4/2012 | 7:39:43 PM
re: Unisphere Wins AT&T Contract They are going to control the Edge soon.
ipfan 12/4/2012 | 7:39:41 PM
re: Unisphere Wins AT&T Contract Unisphere should sponsor the U2 tour.
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