x
DWDM

Nortel's Nasty Surprise

Nortel Networks Corp. (NYSE/Toronto: NT) delivered a blow that left Wall Street reeling after market close today: Citing unexpected delays in capital spending among North American carriers, the company slashed its guidance for the first quarter of 2001.

"The carriers are very nervous about their ability to get new capital," said CEO John Roth in a conference call with analysts late today. "We thought they'd go through this period for about a month, that after January things would clear up." Instead, he says, the carriers have changed the way they're doing business. They're counting "each and every dollar" and seeking to saturate their existing data infrastructure instead of investing in new gear.

As was the case in its last earnings call, (see Nortel Logs Good Quarter, Great Year), Nortel seemed reluctant to point to specific products and markets. Executives did, however, say that sales of optical circuit switching gear was going to be particularly hard hit in the quarter.

All this, Nortel says, has cut the legs out from under its revenue guidance to investors. Revenue growth expectations are now 15 percent for the first quarter of 2001, less than half the original estimate of 30 to 35 percent. Revenues are expected to be $6.3 billion, instead of the $8.5 to $8.8 billion originally set out in last quarter's earnings report. The company expects to realize a loss of $0.04 for the quarter.

What's more, the company says that in order to cut costs sufficiently to meet even these figures, it must lay off 10,000 people, or more than 10 percent of its present work force. Nortel announced in January that it would be laying off 4,000 people, roughly 4 percent of its work force (see Nortel to Cut 4,000 Jobs).

Nortel maintains that throughout all this, it won't be losing any market share. The overall U.S. market, executives say, will realize half of the 20 percent growth the company originally predicted.

The news is in stark contrast to the earnings report early today of Ciena Corp. (Nasdaq: CIEN), in which revenue guidance was raised substantially and executives claimed that visibility into future good fortune was better than ever.

Coincidentally, Ciena's key message this morning was that carriers were turning away from Sonet-based gear and embracing next-generation optical switches. Nortel's guidance reduction seems to bear this out -- at least in part.

Analysts seemed frustrated with Nortel, confronting Mr. Roth during a question and answer period with past reassurances about guidance (see Nortel Soothes Analyst Worries) and telling him the numbers didn't make sense. Some expressed concern that Nortel's numbers could be worse than anticipated.

Nortel wasn't helped by the logistics of the conference call itself: Apparently the overwhelming volume of calls swamped the conference provider, causing analysts to miss most of the first half of Roth's talk.

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com

netskeptic 12/4/2012 | 8:51:38 PM
re: Nortel's Nasty Surprise > The initial bandwidth capacity of this network
> segment will be on average 60 gigabits per
> second. The capacity can be increased up to 9.6 > terabits per second, based on customer demand.

I am wondering what is the current aggregate backbone bandwidth of other networks servicing the same region - I would be surprised if it is over 10G.

Thanks,

Aleksey
melao 12/4/2012 | 8:51:39 PM
re: Nortel's Nasty Surprise so brillouin, could you please shed us some light ?
big_fat_dwdm 12/4/2012 | 8:51:43 PM
re: Nortel's Nasty Surprise http://www.lightreading.com/do...
pingu 12/4/2012 | 8:51:44 PM
re: Nortel's Nasty Surprise Hi Brillouin,

Could you fill us in?

Thanks and Regards,
pingu
brillouin 12/4/2012 | 8:51:47 PM
re: Nortel's Nasty Surprise First, you shouldn't post heresay.

"And the ADMs used were Optera Connect DX. "

Wrong.

"The Optical transport (OADMs, Line AMPs, DWDM Couplers) were Optera LH 7."

Wrong.

"This Terabit Challenge that NT did was sorta not too real. Because, they've planned the spacing between the line amps and regens to be as optimized as possible for our system. I mean, Worldcom actually constructed some sites in the optimized space between the spans."

Very wrong...

pingu 12/4/2012 | 8:51:54 PM
re: Nortel's Nasty Surprise ...with more Nortel/Avanex DWDM systems?

http://www.360.net/News---Rele...

360NETWORKS LIGHTS UP MAJOR SEGMENTS OF EUROPEAN FIBER OPTIC NETWORK

German network segment ready for commercial service

Vancouver and London - 360networks announced today that it has lit 6,100 kilometers (3,800 miles) of its European fiber optic network. Spanning the United Kingdom, France, Germany and Holland, this network segment will soon provide seamless connectivity between 16 major cities including London, Manchester, Paris, Amsterdam, Dusseldorf, Berlin, Frankfurt and Hamburg.

A 3,000 kilometer (1,900 mile) section of the European network in Germany is ready for commercial service, pending German regulatory approval. The remaining sections in Western Europe are scheduled to enter service next month, while 360atlantic - the transatlantic cable between Europe and North America - is scheduled for service by the second quarter.

In addition, 360networks plans to light up a 3,000 kilometer (1,900 mile) segment connecting Denmark, Norway and Sweden in May. The entire 19,300 kilometer (12,000 mile) European network is on schedule to enter commercial service by the end of this year.

"This marks an important milestone in our aggressive European rollout of broadband and colocation services," said Ashwin Chitamun, vice-president of 360networks' European division. "Our lit network will provide our customers in Western Europe seamless connectivity to our extensive global network linking four continents."

The initial bandwidth capacity of this network segment will be on average 60 gigabits per second. The capacity can be increased up to 9.6 terabits per second, based on customer demand.

To ensure optimum network performance, 360networks' European Networks Operation Center in Maidenhead, United Kingdom monitors the company's global network 24 hours a day, 7 days a week.

Globally, 360networks is deploying a fiber optic mesh network that provides major competitive advantages, including scalability and flexibility. The advanced architecture enables the company to introduce new services and revenue streams more quickly, as well as provision services in hours - compared to the weeks it takes other carriers with traditional ring network architectures. 360networks also lights only the portions of the network it requires, resulting in greater efficiency and lower costs.

About 360networks 360networks (NASDAQ: TSIX and TSE: TSX) offers broadband network and colocation services to telecommunications and data-centric organizations. 360networks is developing one of the largest and most technologically advanced fiber optic mesh networks in the world. By mid-2002, the planned network will span 143,000 kilometers (89,000 miles) and link more than 100 major cities with terrestrial routes and submarine cables joining North America, South America, Asia and Europe. 360networks is also developing nearly 3.7 million square feet of network and server colocation space. More information is available at www.360.net.
pingu 12/4/2012 | 8:51:55 PM
re: Nortel's Nasty Surprise Thanks melao! Anyone else? eom
melao 12/4/2012 | 8:52:07 PM
re: Nortel's Nasty Surprise Let me try to share my knowledge... :)

"2) Poster melao says that Nortel has tested its 160-channel x 10Gps DWDM system on a live network on MCI/Worldcom (for a total of 1.6Tpbs). Was this another "Terabit Challenge"? Did NT's system pass? Can we expect them to be shipping to WorldCom? Again, does this system include Avanex's PowerMux?"

Yes the system passed. And the ADMs used were Optera Connect DX. The Optical transport (OADMs, Line AMPs, DWDM Couplers) were Optera LH 7.
As far as i know it doesn't have anything to do with Avanex.

This Terabit Challenge that NT did was sorta not too real. Because, they've planned the spacing between the line amps and regens to be as optimized as possible for our system. I mean, Worldcom actually constructed some sites in the optimized space between the spans. So it usually doesn't happen on real networks.
The fact is, the system IS carrying 160 wavelengths at 10Gbits, but it is working in an ideal case, where the line amps and regens are positioned as good as it could be.

"2)Petabit makes a good point that NT's 160 channel system (with 80 channels in each direction) may be better than 160/176-channel unidirectional systems because it provides an fully operational system on just one fiber (which many European carriers apparently only have?), whereas unidirectional systems need two fibers. BTW, does anyone know which contracts has NT won in Europe with this bidirectional system? Again, does this system include Avanex's PowerMux?"

The bidirectional system using 160 wavelengths is only deplyed in this network that i said on Worldcom.
But, there are older systems (32 wavelengths, 16 wavelengths) that are deplyed and they are bidirectional. Including a network here in Brazil that has 10Gbits in 32 channels. 16 one direction and 16 the other direction.

To make it clear. On NT's systems you either choose 2x (x the number of channels) in one direction or x in one direction plus x in the other direction.

I hope it clears up.



pingu 12/4/2012 | 8:52:08 PM
re: Nortel's Nasty Surprise Firstly, thanks for your answers and the interesting discussion which followed.

My (unanswered) questions are:

LUCENT
1) Is Lucent's new WaveStar OLS800G (320-channel DWDM system) based on Avanex's PowerMux? There have been intimations to that effect and I understand that Lucent has qualified Avanex's PowerMux, but do we know this to be the case? WaveStar certainly sounds like it has PM in there since it is configurable (2.5G x 320, or 10G x 80).

2) Is the WaveStar OLS800G still on track to be commercially deployed in Q12001?

3) Will Lucent's OC768 (40Gps) ULH system, which Harley (from Lucent) expects to be rolled out later this year, come at the expense of the WaveStar OLS800G product? Is PM a part of Lucent's ULH system? Can we expect strong PowerShaper sales if 40G is a Lucent priority, or can Lucent implement some other solution to deal with chromatic dispersion?

FUJITSU
1) We hear that Fujitsu's 176-channel/10Gps DWDM system, FLASHWAVE OADX, is shipping now. This system DOES incorporate PowerMux and we know that Fujitsu is a major customer of these. (Fujitsu was at least a 22% customer in Q1 (end-Sept) and bought around half of Avanex's PMux/PExchangers sold, or about $10 million worth.) Fujitsu's system has been tested by WorldCom, called the "Terabit Challenge".

2) Has FLASHWAVE, then, apparently met the "Terabit Challenge"? Is Fujitsu shipping FLASHWAVE to WorldCom? How about any other carriers? Which carriers are most likely to buy this system?

NORTEL
1) Do all of Nortel's high-channel count systems incorporate Avanex's PM? 80-channel x 10G? 160-channel? From the "Connectivity is King" issue of the Gilder Technology Report, we learn that "360networks has lit 10,000 of its 20,000 route miles in North America with 160 Nortel (NT)/Avanex (AVNX) waves at 10 Gbps." Is this the case, and if so, has Avanex booked these revenues but not yet billed them? How much revenue will Avanex realize from these sales? Is Avanex "half-done" with 360?

2) Poster melao says that Nortel has tested its 160-channel x 10Gps DWDM system on a live network on MCI/Worldcom (for a total of 1.6Tpbs). Was this another "Terabit Challenge"? Did NT's system pass? Can we expect them to be shipping to WorldCom? Again, does this system include Avanex's PowerMux?

2)Petabit makes a good point that NT's 160 channel system (with 80 channels in each direction) may be better than 160/176-channel unidirectional systems because it provides an fully operational system on just one fiber (which many European carriers apparently only have?), whereas unidirectional systems need two fibers. BTW, does anyone know which contracts has NT won in Europe with this bidirectional system? Again, does this system include Avanex's PowerMux?

Who else are we missing? What is Corvis' approach, for example?

Thanks and Regards,
pingu
brillouin 12/4/2012 | 8:52:17 PM
re: Nortel's Nasty Surprise "Okay, but if you want the advertised full duplex capacity of the NT system on a fiber pair then you actually need to buy two complete systems, right?"

Remember,

Everyone advertises capacity in the fiber, regardless of direction. So when you hear someone
say they have a 160 lambda uni-directional system it means that you need two systems to have a "full-duplex" system. This will give you 1.6 Tb/s per fiber, or 160 full-duplex channels, or 3.2 Tb/s TOTAL capacity on both fibers.

When you hear 160 lambda bi-directional (NT) it means that one fiber is carrying 80 full-duplex channels. This is one system on one fiber. If you have another fiber then you can come up with 160 full-duplex channels...still 1.6Tb/s per fiber, or 3.2Tb/s TOTAL capacity on both fibers. So it is the same capacity PER FIBER essentially, just getting there a little differently. The advantage is that for 80 channels (duplex) you only need one fiber, vs. for a simplex system, you still need 2 fibers in order to get 80 duplex channels.

The full duplex capacity advertised for NT as I understand it, is 80 full-duplex channels, 160 lambdas, 160 10Gb/s signals, etc. It's all the same. Is it safe to assume that "channel" means full-duplex as opposed to lambda/wavelength which means simplex?
melao 12/4/2012 | 8:52:19 PM
re: Nortel's Nasty Surprise Furio and Petabit,

Optera LH Release 7 will support 80 channels in each direction (160 channels) or 160 channels unidirectional.

NT will support both.
Petabit 12/4/2012 | 8:52:19 PM
re: Nortel's Nasty Surprise furio,

When number of channels are used, they refer to the number on the fibre, not which direction they travel.

NT builds bidirectional systems, everyone else builds unidirectional systems.

So NT's 160 channel system, is 80 in each direction. Fujitsu, NEC and Alcatel build systems that carry 160 (or 176) in just one direction. So they need two fibres to make a duplex system.

With two fibres you get 160 channels in each direction, whichever approach you use. NT's approach really pays in when you have just leased one dark fibre - you can have an operational system. The reason why NT wins so many contracts in Europe has less to do with 10G and more to do with bidirectional.

P.
melao 12/4/2012 | 8:52:28 PM
re: Nortel's Nasty Surprise "Let's do the math. 800 Gig by 320 wavelengths. = 2.5 Gig per wavelength, i.e. OC48 per wavelength.

Where are the OC192's? Does LU even know how to send that signal and make them work?"

Thta's a good point. Everybody says that LU has every type of equipment first on the Labs. I never doubted that, but what is the problem with them to release a product ?

That's the thing about NT, they've already tested the 160 Lambda DWDM with STM-64/OC-192 signals on a live network on MCI/Worldcom. It mean 1.6Tbps.

Is LU still unaware that they lost immense market share due to their lateness on selling the 10Gbps again ?
wOOp 12/4/2012 | 8:52:28 PM
re: Nortel's Nasty Surprise that is a good question sdagupat

There is no difference how a Optical networking product handles voice or data traffic.

I think Nettles' use of legacy vs new has more to do with how a customer operates their network than with the internal switch technology of a product.

There are probably legacy customers who want to manage bandwidth in defined separable chunks. Also they may want to maintain older restoration times and "Bell System" standards of reliability.

Then there are newer customers who want to manage bandwidth in bigger chunks and funnel all through big fat routers. Also they don't care as much about stringent restoration times or reliability
standards.

Nettles' is saying he is going after the high growth customers.

His emphasis of "data centric" is simply "marketing speak" to say his company is addressing the future not the past.

One caveat. One could say that if a product had an IP or ATM switch instead of an STS-x switch, it would be more data centric. Yes, but I don't think that is Nettles' point since Ciena's major product (CoreDirector) is an STS-x switch.
spont 12/4/2012 | 8:52:29 PM
re: Nortel's Nasty Surprise It's mainly marketing - trying to position as something extremely new while making the others look as legacy, while in effect most companies are working on the same things.
An other thing could be the difference between traffic over IP-ATM-SONET!-DWDM or over IP-MPLS+DWDM. But I truly think it's mainly marketing blabla (not to say that there is not a different market for SONET vs "new" things )
sdagupat 12/4/2012 | 8:52:31 PM
re: Nortel's Nasty Surprise In the following smartmoney article

http://www.smartmoney.com/stoc...

Ciena CEO Pat Nettles, who spoke to SmartMoney the day after his company's surprisingly strong earnings announcement, reminds us that optical networking isn't the monolithic category it may seem. In Nettles's view, there are two optical markets. The first group Gă÷ dubbed "legacy" Gă÷ was designed with voice-centric networks in mind; the second Gă÷ dubbed "next-generation" Gă÷ was designed with data-centric networks in mind. And while the overall optical market is estimated to grow 50% a year, Ciena's research indicates that growth in the legacy-equipment market, which is dominated by Nortel, is flattening, while growth in the next-generation equipment market, where Ciena puts its focus, is more like 70%. (Meanwhile, Ciena says it will grow 95% to 105% this fiscal year, which ends Oct. 31.)

I thought Opticatl networking is a monolithic area. we can send voice and data using the lamabas
at the same time. Obviously not.

Can some body explain, how they would be different.

Thank You very much.
PBC 12/4/2012 | 8:52:32 PM
re: Nortel's Nasty Surprise *The lucent wavestar 800g will support upto *80X10G, 320X2.5G or a mix of both (10G/2.5G) not *to exceed 800G.


Not trying to be an idiot, but!

Does it actually have the ability to send 320 differently spaced ITU-T compliant lambda's on the line side?

What dictates the 800G limit, the switch fabric/matrix?

Wouldn't it be sweet to send off 320 10G/40G lambda's, if the capacity limit could be extended.

-pbc



lambda7 12/4/2012 | 8:52:32 PM
re: Nortel's Nasty Surprise So, does it support 80 channels or does it support 320?

THX

-pbc


The lucent wavestar 800g will support upto 80X10G, 320X2.5G or a mix of both (10G/2.5G) not to exceed 800G.

L7
Petabit 12/4/2012 | 8:52:34 PM
re: Nortel's Nasty Surprise "Why does 80x10G cost half as much?

Thanks and Regards,
pingu"

Ok.

The actual hardware for a transmitter card consists of the common elements (which don't change with the bit rate) and the bit rate specific stuff. 10G modulators and drive electronics are pretty expensive, but overall a 10G card costs twice as much as a 2.5G card. So one 10G card costs half as much as four 2.5G cards.

The extra cost of chromatic dispersion compensation at 10G is offset against the higher cost of a 320 channel mux. So it works out about the same.

P.
PBC 12/4/2012 | 8:52:35 PM
re: Nortel's Nasty Surprise Previously:

The wavestar 800G will also support upto 80 OC-192s. 80 chnls X 10G = 800G

So, does it support 80 channels or does it support 320?

THX

-pbc
lambda7 12/4/2012 | 8:52:39 PM
re: Nortel's Nasty Surprise Things to consider...

- DWDM systems, for the most part, are passive.
- Bandwidth allocation is handled by SONET/SDH ADMs connected to the DWDM infrastructure.
- Costs associated w/ hardware (cards, shelves, bays, floor space) to accomadate 320 vs. 80 chnls.
- 10G/2.5G chnls can be mixed across a DWDM system as long as the aggragate DWDM signal does not exceed 800G.
pingu 12/4/2012 | 8:52:39 PM
re: Nortel's Nasty Surprise Thanks Petabit,

Why does 80x10G cost half as much?

Thanks and Regards,
pingu
optodunce 12/4/2012 | 8:52:40 PM
re: Nortel's Nasty Surprise regarding connectivity :

Does connectivity have an overall cost factor when comparing 80 x 10g vs. 320 x 2.5g?

Or is connectivity at this time not an issue.

od
Petabit 12/4/2012 | 8:52:42 PM
re: Nortel's Nasty Surprise 80x10G costs about half 320x2.5G

Which is why Nortel have been able to pursuade the world to buy 10G.

P.
pingu 12/4/2012 | 8:52:42 PM
re: Nortel's Nasty Surprise Is there any reason to prefer 80x10G more than 320x2.5G? Both have the same bandwidth, but 320 channels offers more connectivity potential, no? Does the wavestar 800G incorporate Avanex's PowerMux? It sounds like it may given its configurability.

Thanks and Regards,
pingu
lambda7 12/4/2012 | 8:52:43 PM
re: Nortel's Nasty Surprise The wavestar 800G will also support upto 80 OC-192s. 80 chnls X 10G = 800G
Ranger 12/4/2012 | 8:52:44 PM
re: Nortel's Nasty Surprise Let's do the math. 800 Gig by 320 wavelengths. = 2.5 Gig per wavelength, i.e. OC48 per wavelength.

Where are the OC192's? Does LU even know how to send that signal and make them work?
pingu 12/4/2012 | 8:52:45 PM
re: Nortel's Nasty Surprise Thanks Harley,

Sticking to Lucent then (where my bro-in-law works, BTW, though not in optics), how about the prospects for aggressively selling its 320-channel DWDM system:

"Designed by Bell Labs, Lucent's new WaveStarGńˇ OLS 800G is a 320-channel dense wave division multiplexing (DWDM) system with a maximum capacity of 800 gigabits per second (Gb/s). That's the equivalent of transmitting approximately 400 feature-length films each second.

The system, which will offer a record-breaking number of optical channels per fiber, will be commercially available in the first calendar quarter of 2001."

Do you think this will be a big focus for Lucent? Is Avanex's PowerMux a part of this product? And, lastly, what is your view of lower-channel, high bitrate systems versus high-channel, low bitrate systems? Is one better than the other, or just different markets?

Thanks and Regards,
pingu
liamsdad_01007 12/4/2012 | 8:52:47 PM
re: Nortel's Nasty Surprise would it kill you to have a civil discussion? If you are a Cisco employee, which it sounds like you are, you are embarrassing the rest of us at Cisco with juvenile and immature postings that say nothing. While Cisco may seem to be better positioned today, that can all change if we do not exercise great vigilance and humility.
Rockford 12/4/2012 | 8:52:48 PM
re: Nortel's Nasty Surprise I agree with you.
Harley 12/4/2012 | 8:53:00 PM
re: Nortel's Nasty Surprise Pingu,

I can't speak as well for NT since I am @LU :)...

However, I think it's absolutely critical to Lucent to aggressively sell their high end DWDM products. Of all the churn going on here (both in head count and projects), one of the major LU efforts is their OC768 Ultra Long Haul system, which they should roll out later this year.

My corporate connections indicate that optical and data (IP) is Lucent's major thrust. I've even heard that we may abandon some of the Ascend/Cascade ATM equipment.

pingu 12/4/2012 | 8:53:01 PM
re: Nortel's Nasty Surprise Which areas do you see Lucent and Nortel stressing the most this year?

Aslo, do you think Lucent and Nortel will be making a greater effort to develop and sell their new high-channel DWDM systems this year? I'm invested in Avanex and New Focus, which count these two companies among their customers.

Thanks and Regards,
pingu
shredj 12/4/2012 | 8:53:04 PM
re: Nortel's Nasty Surprise Oh....cmon. Of course LU will survive. However, they will probably need to shed a few hundred thousand dinosaurs and share office space with the survivors of Wang Labs.

More_LightReading_Junk 12/4/2012 | 8:53:05 PM
re: Nortel's Nasty Surprise bow, wow, wow,,, harley is a lucent loser. who are you to talk about the economy or judge successful companies,,, you're company is a joke. lu will go under within a few years tops. lu debt is HUGE. you're one step away from JUNK bond status big boy. keep up the hard work!

oh, check out cisco's debt... um, something like ZERO.
Harley 12/4/2012 | 8:53:06 PM
re: Nortel's Nasty Surprise Actually, you're both wrong, we (Lucent) may have missed a product cycle, but the -0.29 is from a rising cost structure, not just lowered revenues.

If you look at the revenue per employee numbers for LU, they're grossly higher than the same for NT or CSCO. That implies that there are too many redundant workers that need to be eliminated.

I hate to be critical, but a lot of the posters on all of Light Reading don't really understand how these markets work. Face the realities here, in economic downturns, Service Providers are not willing to take risks by purchasing "hot" equipment from new suppliers. They often play it safe by sticking with the known names and known technology (LU and NT). Watch and see, while both NT and LU are struggling, in the long term , tehy will survive the shakeout.

More_LightReading_Junk 12/4/2012 | 8:53:06 PM
re: Nortel's Nasty Surprise wow, is this some new form of the english language or does this fall into the "gibberish" bucket?
dlharding 12/4/2012 | 8:53:07 PM
re: Nortel's Nasty Surprise Hey...you talk english real good.

Kirby 12/4/2012 | 8:53:07 PM
re: Nortel's Nasty Surprise Let see Nortel & CSCO how they will be death
Because they have been over price for long already
now the time they should be down,
And fair price for the Market they are must be at 2 or 3 dollars per share.

I think they will be get in there and they will be layoff more Emp.
melao 12/4/2012 | 8:53:10 PM
re: Nortel's Nasty Surprise Well i was checking at Yahoo the stocks.

It's weird saying that Nortel could be the next Lucent. As all the big vendors linke NT, CSCO and LU are down. And more, doing a year basis comparision NT is higher than CSCO and LU. I guess it's just a slowdown that will end shortly as the carriers still have a lot of SDH/Sonet equipment and need to replace it.

And what's that hype about SCMR, they're worse than NT in stocks ?
hippo 12/4/2012 | 8:53:11 PM
re: Nortel's Nasty Surprise Here is my last comment about big guys vs small guys...

Historically, it has shown many times that the big guys had too much food on the table, and they couldnt eat fast enough. The small guys came up from the blind side and stole the food, and the big guys didnt even realize...

e.g. starting from the 80s, IBM, DEC, LU, and now NT. EVentually, if the likes of SCMR and CIEN grow bigger and bigger, they'll fall into this category if they can't execute and become tough to manage.

it is important to stay focused, and not blindly expand or acquire useless companies that will never pan out (like LU in '98 and '99).

so far, I think JNPR and CIEN have done a great job...
go_csco 12/4/2012 | 8:53:12 PM
re: Nortel's Nasty Surprise "...Do you think LU's -0.29 result in the past quarter was ALL because of the economy? I dont think so..."

You're right about this point, Lucent has simply failed to execute multiple times even before the economic downturn.


"...I was just trying to say smaller are executing better, and can shift faster according to the market conditions..."

This is a valid point as well, although I would also say that Cisco is still quite nimble for it's size. Last quarter Cisco was just not nimble enough and was "out executed" in some areas. There are some improvements that can be made. Considering the lofty goals, they still turned in a 55% revenue increase.

go_csco!!
liamsdad_01007 12/4/2012 | 8:53:13 PM
re: Nortel's Nasty Surprise Thank you for contributing these articles. They are clear and lucid analysis of the optical market. As opposed to the knee jerk opinions often expressed.
hippo 12/4/2012 | 8:53:13 PM
re: Nortel's Nasty Surprise well, I totally agreed the economy has played a role in NT's slowdown, but from +0.14 to -0.06? That's a huge difference. But I'm also convinced that NT's bad execution also played a significant part.

Do you think LU's -0.29 result in the past quarter was ALL because of the economy? I dont think so...

I was just trying to say smaller are executing better, and can shift faster according to the market conditions...

That's all.
optinuts 12/4/2012 | 8:53:13 PM
re: Nortel's Nasty Surprise i think we've come to a definition of intelligent sonet...its mesh networks with point and click provisioning.

its interesting none of the big carriers have this vision yet. ciena's customers fall in the clec, bb builder column. its also notable they have no international customers, where sncp (or pre-provisioned mesh) is the preferred network.

but i would caution. look at the numbers. i think the market for "traditional" boxes is far larger than "intelligent" boxes. it may be trending that way but a $100M in sales does not a network turnaround make. i suspect ciena's "jewel" (harley, note) is its dwdm product line.
go_csco 12/4/2012 | 8:53:14 PM
re: Nortel's Nasty Surprise "...btw, stop blaming the US economy slowing more than what you had expected. it is the worse excuse. it is YOUR own problem.

the economy hasn't slowed for those like JNPR, SCMR, and CIEN...."

Come on, you guys can't be this clueless!!
Of course it's an ecomonic problem!! Have you guys been under a rock the last few months?!!..

Yes it hasn't effected JNPR, SCMR, or CIEN, but have they been tasked with growing quarterly revenue of 6 billion plus by over 30 percent in this tough market?....

Simple ecomomics here.....Larger companies with larger and more lofty revenue expectations have a harder time when ecomomic conditions worsen.

When nitch players like CIEN, JNPR, and SCMR turn in 6 billion plus revenue, and compete in various markets, then your argument will become more valid.....

go_csco!!
areyousure 12/4/2012 | 8:53:14 PM
re: Nortel's Nasty Surprise Furio states:

"Currently I believe there are only two intelligent optical switches - CoreDirector and SN 16000..."

What about the Corvis Optical Switch? Is it not "intelligent" enough to be mentioned?

:-)

optinuts 12/4/2012 | 8:53:14 PM
re: Nortel's Nasty Surprise i agree, footprint is an advantage ciena has over nortels dx, but nortel has an hdx in the works, which has tremendous density. but footprint isn't intelligence. where's the intelligence? (sycamore sn series has rapid provisioning, thats intelligence) but with core director, ciena is selling a sonet box.
ExNortel 12/4/2012 | 8:53:15 PM
re: Nortel's Nasty Surprise Oh yea, you think NT will re-price options for everyone this time, or only the executives again?

It's going to a VERY long 18 to 24 months before the stock even comes close to $50 again, even then most of the employees are still underwater on stock options I assume.

Can you say brain drain coming? The likes of which will make the mass exodus Lucent suffered seem small in comparison.

John, Clearance, what were you thinking at the last earnings conference call where you confirmed 1st QTR growth estimates...WAKE UP! Haven't you guys learned from your past mistakes?

Perhaps they'll become cluefull this time and learn??!!??!! One can only hope.

ExNortel
netskeptic 12/4/2012 | 8:53:16 PM
re: Nortel's Nasty Surprise Naive question about demise of SONET. I was bought on the argument by Sycamore that SONET electronic components are going to be a cheap commodity pretty soon, so it will be perfectly OK terminate every wave of DWDM into SONET chips, then switch them electronically into different waves.

Is this picture drastically incorrect ?

Thanks,

Netskeptic
optinuts 12/4/2012 | 8:53:17 PM
re: Nortel's Nasty Surprise i was talking about core director, not dwdm.
nortel, lucent, tellabs, and ciena all have core director like products. core director is not specially innovative on that front. it optimizes around mesh, it scales better at higher capacity, but in itself is not a reason to say service providers have changed course in how they implement their networks. its more of the same as far as i am concerned. now if you tell me they are buying ip switchies in lieu of core director i'll believe networks have turned the corner.
Harley 12/4/2012 | 8:53:17 PM
re: Nortel's Nasty Surprise I think so, they aren't processing pure bandwidth. The Village's, Caspian's, et al are trying to push value-added services with their boxes.

If they were pure optical switches, I'd say no. These next gen boxes have some merit I believe.
Harley 12/4/2012 | 8:53:18 PM
re: Nortel's Nasty Surprise Optinuts,

It's just a joke...Again, see Sycamore's site for the details.
tasmandr 12/4/2012 | 8:53:18 PM
re: Nortel's Nasty Surprise With all those big companies "going down", is there really a market for the start-ups such as Jasmine, Caspian Networks....

Tasman
optinuts 12/4/2012 | 8:53:18 PM
re: Nortel's Nasty Surprise get real, guys.

lucent and nortel sell the same stuff ciena does. all this fluff about core director being next gen and taking over optical. its as sonet as they come. i must be on a yahoo chat board. its easy to sell a 100M of this stuff; its when you have to sell 10B of it that the problems with the macro economy come into place.

nortel is right about the US being the problem, with all its failed CLECs. europes monopolies do not have a problem with cap budgets.

harley...its not the cfo (or as michael johnson said, its not the shoes)
Harley 12/4/2012 | 8:53:19 PM
re: Nortel's Nasty Surprise Now, If Frances Jewels was the CFO of NT, (or better yet, LU), this may not have happened.
ssimmons 12/4/2012 | 8:53:20 PM
re: Nortel's Nasty Surprise What a difference a year makes!!!!

Last year, everyone was saying that Nortel had it made with the right product mix. The reality is that it is big company with a lot of products and a lot of legacy....

Well John Roth.... Remember what happened to Dr. Stern 10 years ago...
femtokid 12/4/2012 | 8:53:20 PM
re: Nortel's Nasty Surprise Cheers Ex

For reminding me, my holiday is dwindling in a puff of SONETless smoke.
Ahh Well.........

40gig anyone
pingu 12/4/2012 | 8:53:21 PM
re: Nortel's Nasty Surprise Good points hippo!

Here is some more reading to put NT's announcement into perspective

From Briefing.com:

Nortel (NT) 29.75 +0.20: It was the best of times. It was the worst of times. Ciena (CIEN) and Nortel are the two cities in this tale. As we cautioned in our earlier Story Stock on Ciena, it was very important to learn the correct lessons from the company's strong earnings report this morning. Our conclusion was that companies with exposure to fewer but stronger carriers and whose business was focussed on equipment which reduced network costs, such as optical switches, would fare better than companies such as NT which had broad exposure to carriers and product lines. It didn't take long to get support for that conclusion. Nortel's downward guidance was rather severe -- Q1 revenue guidance was taken down to $6.3 bln from $8.1 bln. On the conference call, NT didn't mince words about the source of the unexpected weakness; it was the US and it was primarily optical. As the company put it, carriers are investing in utilizing capacity in existing routes but are not looking to build new routes until every network is fully utilized. This actually fits in relatively well with Ciena's message; its DWDM equipment and optical switches can help carriers to increase capacity and reduce costs in existing networks. Nortel is also DWDM player, but it has been to slow to deliver its optical switch and has huge exposure to many other optical segments that build on legacy SONET (sychronous optical network) networks; the demand for which appears to be slackening even as demand for more cost-effective next-generation optical gear offered by Ciena accelerates. What we may be witnessing is a key turning point in telecom evolution. The wait has been on for legacy SONET networks to eventually become extinct as they are more costly than next-gen networks. But with capital flowing freely for years, carriers were building everything -- legacy networks and next-gen networks. With capital now scarce and carriers becoming more disciplined, they are focussing on equipment that can deliver revenue-generating services and reduce network costs. The telecom sector is not a monolith. Just as there was eventually a sifting in the Internet sector that distinguished winners from losers, so too will there be in telecom. Optical companies with exposure to legacy SONET equipment are a much more dubious long-term proposition; these include NT, Lucent (LU), to some extent Cisco (CSCO) given its Cerent acquisition, and Redback (RBAK) with its Siara acquisition (both Cerent and Siara developed boxes that build on legacy SONET networks). Companies that are better positioned to deliver next-gen networks are CIEN, Sycamore (SCMR), and Corvis (CORV). Note: after hours trading on NT saw the stock trading down to 22.75, off 7 from the close. - Greg Jones, Briefing.com

Now read this:

A Death Foretold by George Gilder
http://www.forbes.com/asap/200...

Regards,
pingu
hippo 12/4/2012 | 8:53:29 PM
re: Nortel's Nasty Surprise btw, stop blaming the US economy slowing more than what you had expected. it is the worse excuse. it is YOUR own problem.

the economy hasn't slowed for those like JNPR, SCMR, and CIEN.
hippo 12/4/2012 | 8:53:30 PM
re: Nortel's Nasty Surprise it is pretty obvious by now that the big guys are losing their lunch. the little guys are eating them!!!

JNPR, SCMR, CIEN all report better than expect results.

LU, CSCO, NT all missed or warned.

and it is company specific. the leaner and meaner ones are more flexible and will execute much better.
ExNortel 12/4/2012 | 8:53:31 PM
re: Nortel's Nasty Surprise Here's the LU quarter FINALLY coming out...a few more to go...

Ex
YankeeLondon 12/4/2012 | 8:53:31 PM
re: Nortel's Nasty Surprise >Ironically, Ciena's key message this morning was >that carriers were turning away from Sonet-based >gear and embracing next-generation optical >switches. Nortel's guidance reduction seems to >bear this out -- at least in part.

Ciena's Coredirector appears to be a Sonet MSPP.
I would like to conclude that Ciena's product
obviates the need for a CO to buy separate
Sonet ADM, Sonet DACS or Crossconnects. Ciena's
product seems to be encompass the ADM,DACS,
Crossconnect in one Sonet device.

ExNortel 12/4/2012 | 8:53:32 PM
re: Nortel's Nasty Surprise Told ya so...glad I left when I did!!!!!

Sorry NT employee's..stick around another 1 to 2 years, your stock will go back up, soon, real soon, really, soon, anytime now, just wait, soon, see, there it go's, .12, only $60 more to go!

Ex



abarbier 12/4/2012 | 8:53:33 PM
re: Nortel's Nasty Surprise the economic slowdown will separate the winners
from the losers. NT will lose money next Q (4 cents a share)...they are in BIG trouble as the
massive layoffs indicates.
Is CIEN eating out market share?
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