re: Movaz Scores $60M MoreBut seriously, I am in camp who thinks this financing is far better news than yet another NE vendor shutting down because their backers weren't willing to provide additional support on any terms.
You can call it a harbinger that the industry thinks the market will turn around, like the optimists on this thread.
On the other hand, you can say these investors have not absorbed the lesson of 1998-2001, and that they are ignoring pretty depressing (and negative growth) industry forecasts for carrier capex and revenues.
Good news is when we see demand side growth, not pumping-up a supplier with cash. That's money that could have been better spent elsewhere.
re: Movaz Scores $60M MoreHigh Plains, you are missing the point here. People are just looking for good news for a change. And they are right: these boards are full of naysayers. Yes there is a contingent here that tends to inject reality where there's a lot of hype, which is a good thing, but I think natural causes have really taken a lot of the hype factor out lately.
Why are you so negative? If you think the industry isn't going to recover, why are you reading these boards?
BTW I disagree with the statement that good news itself will speed a recovery. That's just illogical, irrational, wishful thinking. Solid business fundamentals are what will bring the industry back. So I agree with you here.
Lastly, I am tired of comments like: "wake up...the industry is in the dumps. adjust to reality." That kind of message is really patronizing to the folks who read and post in these boards. It also pisses me off personally because we all see it and feel it every day of our lives. We don't need to be reminded every five minutes.
re: Movaz Scores $60M Moreim just happy that in this economy somebody has their job for longer .. im not really concerned with how smart the investment was as long as some people get to continue leading their normal lives.. thats where my sympathies lie.. as for everybody who wants to comment on the smartness of the investment.. well time will tell ..
re: Movaz Scores $60M MoreIn the long term, we wind up somewhere between 1998 and 1984 in terms of competitive carrier landscape-far fewer service providers, deploying architectures with 10 year+ lives, provided by a small number of equipment vendors. Time to market becomes less important than timing product availability to carrier budget cycles, support for (and appreciation for) legacy infrastructure, high-availability (5-nines may not be good enough) etc. Not friendly turf for start-ups unless they can partner with the big guys on an OEM/resller basis. In other words, back to the future. ================================================
This is what the big carriers may want, but I doubt it is going to happen. The genie of rapid technical progress is out of the bottle now.
In order to understand how recovery *might* happen, here is some food for thought:
a) Conventional Wisdom: data services don't make money for carriers.
Truth: Small mom-and-pop ISPs did make money, and continue to make money today. They run very tight operations, and yes, they do not offer you 99.999% availablility, but if you want that, you can get two of them.
The situation is exactly similar to how Dell makes money selling PCs while Compaq/HP/IBM struggle. You have understand the respective organizational cultures, the operational structure, and the break-down of their costs, in order to understand why this is true. Easy generalization like "Nobody makes money in PCs" is wrong.
b) Conventional Wisdom: the industry is destroying itself due to relentless progress of technology outrunning the economics.
Truth: Technology is what it is. Given that people figure out how to squeeze more and more out of fiber and silicon every year, smart businessmen would devise business plans that are aligned with (and assume) such technological progress, and fast obsolescence. Again, PC industry has figured this out.
It is dumb to try to slow down technological progress. It has a way of slipping through. Think unlicensed broadband wireless ...
Put these together, and here is a plausible future for the industry: the mom-and-pop ISPs become next generation broadband wireless ISPs (WISPy!). They buy cheap equipment and offer megabits per second at the $30-50 level. They may even ask the customer to buy the modems, and save capital.
Some smart CLEC will connect these base stations through fiber links. A future Craig McCaw or John Malone will start rolling these up into regional and then national carriers. These national carriers will have a lot fewer employees compared to current generation telcos.
Business customers won't trust these guys for a long time, but consumers only want a low price. The dam will break.
re: Movaz Scores $60M MoreSecond tier investors deserve a little bit of a break, but be clear on this, I'm no fan of dumb investment dollars either. These guys rarely get an opportunity to even sniff at a "perceived" potential winner, they're just eating the scraps from the big guys' table.
The real problem here is with Movaz itself.....passing off what amounts to a $60M wash round like it's a watershed moment in the sector's recovery. The size of the investment would ordinarily be something to be impressed by....if you weren't so aghast at the size of Khosravi's completely unwarranted ego while he boasts about his company's progress to some line in the sand.
Oh, lost in the footnotes....all of his hard-working employees can look forward to having to meet even MORE ridiculous deadlines, meaning MORE weekend work and all for significantly less of a payoff.
To quote Triumph himself: "Movaz, yes, Movaz is the number one optical company.....for me to do number two on....."
**Sorry for the rant, regular contributors....but this just had to be said**
re: Movaz Scores $60M MoreHigh Plains, you are missing the point here. People are just looking for good news for a change. And they are right: these boards are full of naysayers. Yes there is a contingent here that tends to inject reality where there's a lot of hype, which is a good thing, but I think natural causes have really taken a lot of the hype factor out lately.
yes you'd think that, however, I am still amazed at a lack of reality in some of the articles and posts on this website. just injecting some reality here. Why are you so negative? If you think the industry isn't going to recover, why are you reading these boards?
obviously the industry will recover. but the recovery ain't anywhere near and many would argue there's still a lot of shakeout left. again, reality check. BTW I disagree with the statement that good news itself will speed a recovery. That's just illogical, irrational, wishful thinking. Solid business fundamentals are what will bring the industry back. So I agree with you here.
Lastly, I am tired of comments like: "wake up...the industry is in the dumps. adjust to reality." That kind of message is really patronizing to the folks who read and post in these boards. It also pisses me off personally because we all see it and feel it every day of our lives. We don't need to be reminded every five minutes.
some guy no this board asked me why I thought Movaz wasn't going to be wildly successful selling their 6 metro DWDM products. here is the answer - read it and tell me exactly which part you disagree with: 1) carriers aren't buying metro DWDM systems now 2) the existing vendors can't even sell their systems to existing customers who were previously buying them (i.e. ONI, Nortel, CIENA, Lucent) 3) the carriers they're selling to aren't even solvent themselves, or are DRASTICALLY reducing capex (i.e. worldcom, XO, GX, Williams, MFN, Qwest, Verizon, SBC...) 4) metro DWDM, and particularly all optical switching, business case hasn't been proven
conclusion: there is little or no market for metro DWDM right now, or there are too many players
re: Movaz Scores $60M MoreWe've got to look beyond the gee-whiz factor - or even product performance - when predicting the success of any company, legacy or startup, or even when forecasting the recovery of this battered industry.
Right now there's no fast end to the effects of Enron and Andersen in sight for telecom. The SEC is looking into every major player, and with good reason. Accounting changes and restated performance figures are killing everyone who got away with hiding actual performance (and that's just about everybody). Until the SEC is finished reporting its findings, and until some sort of track record is established under the new rules and practices to give the financial analysts some confidence, carriers will keep a tight grip on the checkbook. The trickle-down effect of that attitude will keep money out of the equipment sector, especially from the companies counting on investment in innovation.
There will likely be a wave of consolidation among carriers and vendors just prior to any serious recovery. Meanwhile, the success or failure of the Tauzin-Dingell/Breaux-Nickels efforts to stimulate ILEC investments in broadband, while likely significant in the short term, ignores the fact that this is an industry that has been radically altered by competition in spite of the CLEC implosion.
If the recent investment in Movaz keeps a pulse in that company for another 12 months, it may be enough to help them weather the storm. But they and *every* startup (and established player) in this industry are in for a long, cold winter.
The new startup crop is in a better position to survive. They've been weaned on austerity and have no habit of high burn rates to overcome. They've got their money and can plan its use for the long term, they've got the lessons of the last four+ years to guide them, and they aren't clinging to some false hope of a quick turnaround.
re: Movaz Scores $60M More1) carriers aren't buying metro DWDM systems now 2) the existing vendors can't even sell their systems to existing customers who were previously buying them (i.e. ONI, Nortel, CIENA, Lucent) 3) the carriers they're selling to aren't even solvent themselves, or are DRASTICALLY reducing capex (i.e. worldcom, XO, GX, Williams, MFN, Qwest, Verizon, SBC...) 4) metro DWDM, and particularly all optical switching, business case hasn't been proven
True. Someone on this thread said Movaz' VCs were not second tier. If they were first tier, why can't they see the simple logic that a market doesn't exist.
I'd be pissed if I were an LP in one of those funds. I read that Accel's investors want half their money back.
You can call it a harbinger that the industry thinks the market will turn around, like the optimists on this thread.
On the other hand, you can say these investors have not absorbed the lesson of 1998-2001, and that they are ignoring pretty depressing (and negative growth) industry forecasts for carrier capex and revenues.
Good news is when we see demand side growth, not pumping-up a supplier with cash. That's money that could have been better spent elsewhere.