Sycamore: Good News in the Offing?

Rumor du jour:

Sycamore Networks Inc. (Nasdaq: SCMR) is working on a big deal with Japan’s NTT Corp. that could come to fruition in the next few weeks.

This information comes from a previously reliable source, although at press time it wasn't clear whether the source is a Sycamore shareholder or not. Sycamore itself declines to comment.

If the rumor proves to be true, it would give Sycamore a much needed boost. Some of its other contracts, notably with Williams Communications Group (NYSE: WCG) and 360networks Inc. (Nasdaq: TSIX; Toronto: TSX.TO), appear to be going sour (see Sycamore Drops a Bomb).

Industry observers are skeptical about the rumor, pointing out that Sycamore has had more success selling equipment to startup carriers laying new fiber and not using Sonet/SDH, like Sweden's Utfors. NTT is likely to be at the opposite end of the scale, with massive amounts of older fiber and existing SDH infrastructure.

-- Peter Heywood, International Editor, Light Reading http://www.lightreading.com

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rtfm 12/4/2012 | 8:30:12 PM
re: Sycamore: Good News in the Offing? $48 per year for $100 Mbps?

That sounds very low (low margins...needing high volume and penetrations?), in addition to which that is possibly just raw bandwidth, with minimal Service Level Agreements (and lots of over-subscription)?

Could you please give some more details on this?

rtfm 12/4/2012 | 8:30:11 PM
re: Sycamore: Good News in the Offing? I meant $48 per month in the first line, not per year. Still very cheap!
miki02 12/4/2012 | 8:30:08 PM
re: Sycamore: Good News in the Offing? The success of the startup surely depends on the capital market and the markups they charge for "broadband contents".

But their battle plan is very simple. They've managed to get a license to install cables across the electric polls in the congested Tokyo metro area and they are now laying own optical fibers on top of it. For the last-mile (or last 50-100m) they've decided to use 100BASE instead of 10BASE (not much difference in cost, but a lot marketing-wise).

They expect to generate $45-50/mo/house from streaming contents on top of the basic connection. (No subscription figures announced.)
NTT, up until several months ago, was thinking about a 10Mbps FTTH service for about $200-300/mo. sometime in the next 2-3 years. Latest plans: 10Mbps $40/mo. (Y5,000); 100Mbps $72 (Y9,000); launch: July. Given subscribers must pay extra for own ISP (NTT are banned from the territory) this is a very "expensive" offering.

Why the fad about FTTH? Only the Japanese know...
rtfm 12/4/2012 | 8:29:54 PM
re: Sycamore: Good News in the Offing? There's a news wire feed (and posting on sycamore's site) stating it has the lead in European DWDM.

Didn't the RHK article state nortel was in the lead? Or, is there funny math going on, as to what is DWDM vs WDM?

Any explanations?
Peter Heywood 12/4/2012 | 8:29:53 PM
re: Sycamore: Good News in the Offing? We nearly fell for this one too. The key word is METRO.

RHK says Sycamore has the biggest share of Europe's METRO DWDM market. I suspect that the overall market is still in its infancy and thus this really doesn't add up to much.

Previously, RHK had said that Nortel had the biggest share of the overall DWDM market in Europe.

In this case, it's worth noting that RHK doesn't split out the high and low channel count market segments in Europe.

If it did, there's a fair likelihood that Ciena would have the largest share of the high channel count DWDM market, and that's the market that's growing fastest.

In other words, lots of RHK-assisted spinning going on here.
LightCycle 12/4/2012 | 8:26:31 PM
re: Sycamore: Good News in the Offing? Anyone with the latest scoop on this so called NTT deal that Sycamore is supposed to have in the bag?

Also, whats your take on ODSI? I thought I was on the mailing list, it all but seems dead these days.

How does this play with Sycamore's so-called use of OSPF routing intelligence and MPLS signaling within the optical domain?

miki02 12/4/2012 | 8:26:30 PM
re: Sycamore: Good News in the Offing? >Anyone with the latest scoop on this so called NTT deal that Sycamore is supposed to have in the bag?

NTT hasn't announced details of the new FTTH service that starts in July. But from what's been known, the "last-mile" technology is their own and access and core switching are external - very likely SCMR if the news source is a company insider. :)

But I doubt NTT is willing to disclose tech suppliers before launching a new service. Note NTT spends $3B annually on next-gen R&D (a large portion on optical) and is struggling with declining phone revenues (lost $750M this year - group companies, like DoCoMo, excluded -) and excess workforce.

Thus, my estimate - the deal will be handled quietly and the figure would be modest - upward of $50M.

Of course, those in the know won't talk.
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