Why Williams Sold Its Sonus Shares

At first glance, the recent sale by Williams Communications Group (NYSE: WCG) of an enormous block of shares in Sonus Networks Inc. (Nasdaq: SONS) doesn't look good for Sonus.

On closer scrutiny, though, the sale appears to have more to do with Williams's need for fast cash than with any possible disadvantage to holding Sonus stock.

"This doesn't mean anything for Sonus," says Steve Levy, analyst at Lehman Brothers. "It means that Williams needs the money."

Sonus is generally acknowledged to lead the market in voice-over-IP gateways. These gateways use so-called softswitch technology to mimic circuit switches and port legacy voice traffic to packet-based networks. The company has been public since May 2000 (see Sonus Networks Inc. (SONS)).

According to Thomson Financial Network, Williams filed with the Securities and Exchange Commission on February 9 to sell 635,061 shares of Sonus stock valued at about $25 million. The filing apparently wasn't made online, and thus came to light later than it would have otherwise. Williams, which has been a stakeholder since the Sonus IPO last May (see Sonus Raises $115 Million in IPO), hasn't disclosed the full amount of its position in the company.

Both Williams and Sonus say the sale won't affect their separate customer/supplier relationship. The two have a deal that dates to February 2000, when Williams agreed to a $20 million, three-year purchase of Sonus gear. Sonus still says that deal could produce up to $100 million in revenues, based on estimates of the size of Williams's requirements to port voice circuits to its broadband IP network.

Porting the circuits is part of a larger-scale $1.9 billion access-network buildout that Williams is eager to complete this year -- and for which it's been revamping its finances and drumming up cash.

In February, for instance, Williams Communications reduced its debt and increased its assets by reworking its equity agreement with parent company Williams (Nasdaq: WMB). The carrier also arranged for more credit (see Williams Increases Credit Facility). Williams also has told its suppliers that it won't pay for equipment until it's actually using it.

Williams isn't alone in its struggle to fund capital expenditures this year. The call for capex cash reportedly motivated Broadwing Communications (NYSE: BRW) to sell 2.4 million shares of Corvis Corp. (Nasdaq: CORV) last week (see Broadwing Sells Corvis Shares).

Separately, Qwest Communications International Corp. (NYSE: Q) engineered a debt sale last month (see Qwest Tidies Up Finances) to fund capex. Others, including XO Communications Inc. (Nasdaq: XOXO), plan sales of debt and equity combinations to fund their ongoing network needs.

It's not clear just how reliance on stock transactions may have played into Sonus's recent nosedive. Today, for example, shares were selling at 20.62, down 3.12 (over 13 percent).

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

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gea 12/4/2012 | 8:43:32 PM
re: Why Williams Sold Its Sonus Shares Wow!

That grand finale concerning Rosa Parks and the American People remind me of that Episode of the Simpons where Grandpa Simpson finishes his rambling and incoherent letter with "I am not a crackpot!"
whatever 12/4/2012 | 8:43:51 PM
re: Why Williams Sold Its Sonus Shares "so what media sources do you recommend/advise to stay away from?"

It is too hard to say. The stock bashers (people trying to spread rumors to make stocks crash for their benefit) will be at most sites. What you are reading is everyone's opinion and they usually are VERY opinionated. You can't get around it. The editors of these stories are holding some of the same stock, they will NOT down their stocks at all.
se 12/4/2012 | 8:44:30 PM
re: Why Williams Sold Its Sonus Shares so what media sources do you recommend/advise to stay away from?
whatever 12/4/2012 | 8:44:54 PM
re: Why Williams Sold Its Sonus Shares I had one that was deleted as well on another post. I thought maybe I was being "hypersensitive". I won't go any further with it except to say, I ran a forum and when people went overboard, I did delete posts. I don't see anything in fanfare's that would warrant that, but some people can't stand to lose.

As far as the CORV bashing going on or the ignorance thereof, I would say, just scroll down the list of people who are "funding/sponsoring" this site. Would there happen to be Sycamore over there?

Another interesting fact...Williams is VERY closely related to CORV right now. Lets see, CORV stock was DUMPED, and it was Williams fault that for ridding themselves of SONUS. Are these two related?

I am not a whining little baby either. Neither was Rosa Parks when she wouldn't sit in the back of the bus, neither was American people, when they wouldn't stand for British Rule any longer.

That is all.
fanfare 12/4/2012 | 8:45:19 PM
re: Why Williams Sold Its Sonus Shares For some reason my response post to fk was deleted. It had been successfully posted around 2:00 pm. Later, I noticed (around 5:00) that it was no longer posted to the board. Anyone able to shed any light on this?

Fortunately I always keep a record of my posts and so I have posted it again under the subject 'fk'.

If I was the suspicious type ... well never mind that ;-)
fanfare 12/4/2012 | 8:45:19 PM
re: Why Williams Sold Its Sonus Shares While I do not veiw any of my posts as being 'hypersensitive' or overly critical of anyone at LR (if you read my post I'm sure you will concur .. then again .. perhaps not) I do think you are the one exhibiting a marked degree of 'hypersensitivity'.

You said "merely to smear the editors with blanket, rote accusations of bias, malevolence and ineptitude.."

That statememt doesn't strike you as a 'bit' hypersensitive in light of the very minor degree of attacks posted? I mean .. 'ineptitude'?? Are you saying that nobody, other than you, has any valid arguments? I find that to be a bit one sided .. don't you? Malevolence? ... please. Also.. do you really suppose that these statments you are referring to are made 'merely to smear editors'? Thats a bit of a knee jerk reaction in and of itself... wouldn't you agree?

You said "My complaint isn't about etc etc"

Why is it that your statments constitute a 'complaint' and the concerns of other posters are labled, by you, as 'bellyaching' or 'whining'?

I find this (to use your premise) to be a 'blanketing' statement on your part.

You seem to think you have a privilidged understanding as to the motives of all posters here. While I would not pretend to know one way or the other .. I would ask you this: What exactly is 'your' motivation for taking the time to enlighten us poor mundane folk with your omniscient opinions?

testerguy 12/4/2012 | 8:45:24 PM
re: Why Williams Sold Its Sonus Shares I know that Corvis has a revolutionary product and is difficult to accept such BS, I am not a sheep and will not stand for this and will speak up as I please -
testerguy 12/4/2012 | 8:45:24 PM
re: Why Williams Sold Its Sonus Shares Clearly the way to have positive press here is to give LR money. I believe I shall discontinue reding this rag
allidia 12/4/2012 | 8:45:26 PM
re: Why Williams Sold Its Sonus Shares I agree with you generally but if she used the word "dumped" it could and probably should be construed as a negative. In this case CORV shares were "dumped". Bad choice of words which lends crediblity to those arguing bias. Secondly, this article is like Wall Street analysts cutting a stock from Strong Buy to Buy.We know what they mean by announcing the opinion change (relate to word "dumping") and then they go on to say how things still look promising for the company (CORV gear is working..). Mayan, Zaffire, Ironbridge etc.. reported negative actions ..layoffs..but what if LR wrote one of these and blamed the layoffs on another company???
fk 12/4/2012 | 8:45:36 PM
re: Why Williams Sold Its Sonus Shares I just reread the article on the Broadwing sale of Corvis stock, and it only reinforces my belief that you are being hypersentive here. The article pointedly says that Broadwing is fully committed to its relationship with Corvis, that they believe in the technology, and that they were raising money with the sale to fund bulding out their network. How you find this to be critical of Corvis is a bit of a puzzle.

On the other hand, I don't have a financial stake in Corvis or any of its competitors (unless you want to talk about the 100 shares of Nortel, and I sure don't considering the acquisition cost.) Funny how everyone here complaining about alleged bias has a stake in the company. In the article in question, the accusation that Broadwing's sale of Corvis stock was made to be an indictment of Corvis as a company or as a technology is wholly without merit. If this is supposed to be indicative of bias, then fellas, you're failing to convince this unbiased observer.

But my complaint isn't about Corvis in particular, but the general level of whining. Every single article talk has one or more of the following:

1) Accusation of bias against the company being talked about
2) Accusation of bias against another company not being talked about
3) Accusation that the editors are being bought
4) Demand to see the investors of record in LR

It is a fact that there is someone reading this site that has a financial stake (usually the biggest of one's life) in whatever startup is being discussed here. Nonetheless, that doesn't justify the level of bellyaching. It's so tiresome. Maybe you guys enjoy reading the endless litany of complaints, but I find it to simply be volume without meaning. Which is not to say that there aren't valid complaints. Those are a different story. But to merely smear the editors with blanket, rote accusations of bias, malevolence and ineptitude is a waste of everyone's time. If you believe you have a point to make, make it. But be prepared to back it up. It's easy to make accusations. To have meaning, you have to be able to support your contention, and the vast majority of the time, the accusers aren't even coming close.
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