Alcatel-Lucent might be edged out of Verizon's long-haul transport network, with Ciena adopting a solo supplier status with the Tier 1 US operator, according to a report from experienced analyst Simon Leopold.
Ciena Corp. (NYSE: CIEN) was chosen for Verizon Communications Inc. (NYSE: VZ)'s long-haul network in 2010/2011 and had a clear run at the initial optical deployments before being joined at a later date by Alcatel-Lucent (NYSE: ALU). (See Verizon Readies 100G Launch in US and AlcaLu, Ciena Look Good for Verizon RFP.)
Now, though, according to Leopold, a managing director at Raymond James Financial Inc. (NYSE: RJF), AlcaLu is going to be "displaced" and Ciena is going to dominate.
"We think Verizon intends to abandon Alcatel-Lucent as a second source for its long-haul network and focus future investments toward sole-sourced Ciena," states the analyst in a research note issued Monday, who believes that Ciena's revenues will get a $40 million boost in 2016 as a result of the shift.
According to the analyst's sources, AlcaLu "struggled with technical issues and delayed deliverables… With the pending acquisition of Alcatel-Lucent by Nokia, we suspect operators are uncertain regarding Nokia's long-term commitment to invest in the possibly unprofitable Alcatel-Lucent optical unit," added the analyst, who also expects Ciena to pick up extra business from AT&T. (See AlcaLu Execs Lose Out as Nokia Unveils New Top Team.)
Verizon, Alcatel-Lucent and Ciena all declined to comment.
The suggestion that AlcaLu might be edged out of Verizon's network will alert other vendors to a potential opportunity to become the second-string supplier behind Ciena, even if Leopold does believe Verizon might be happy to commit to a single vendor. Among those that might want to know more are Infinera Corp. (Nasdaq: INFN), which is on something of a roll right now.
— Ray Le Maistre, , Editor-in-Chief, Light Reading