Lucent Reports Profit, See Growth in Low Single Digits

Lucent Technologies reported quarterly revenues of $2.19 billion, a decrease of 3% sequentially and 9% from the year-ago quarter. Quarterly net income was $68 million or 2 cents per diluted share -- marking Lucent's third straight quarter of profitability. For comparison, Lucent posted net income of $338 million or 7 cents per diluted share in the preceding quarter and a net loss of $351 million or 14 cents per diluted share in the same period a year ago.



Lucent said its mobility business remains strong, highlighted by an agreement with Verizon Wireless to provide mobile networking equipment for its high-speed wireless data service. The company also noted growth opportunities for its optical business and its "Accelerate VoIP" solutions.



However, Lucent warned that "at this point, we now expect annual revenues to increase on a percentage basis in the low single digits for the fiscal year. While we may still see some quarterly fluctuations, we continue to expect to report a profit for the year, excluding any additional impact from a revaluation of the warrants."



Some highlights from the quarter:

• Gross margin was 43%



• Operating expenses were $623 million as compared with $648 million in the preceding quarter



• As of 31-March-2004, Lucent had $4.6 billion in cash and marketable securities. This represents an increase of more than $300 million from the previous quarter.



• Revenues for the Integrated Network Solutions (INS) division were $738 million, a decrease of 7% sequentially and a decrease of 5% compared with the year-ago quarter.



• Revenues for the Mobility Solutions division were $951 million, a decrease of 1% sequentially and a decrease of 13% compared with the year-ago quarter.



• Revenues for Lucent Worldwide Services (LWS) were $479 million, an increase of 3% sequentially and an increase of 11% compared with the year-ago quarter.

http://www.lucent.com

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Sprint's Q1 Revenue Rises 6%, Sees Strength in Wireless

Sprint reported quarterly revenue of $6.707 billion, up 5.6% over the same period last year. Net income for the first quarter was $222 million versus net income of $1.67 billion for the same period last year, which included a gain of $1.31 billion from a discontinued operation and a cumulative effect of change in accounting of $258 million. Some highlights:



Sprint PCS

• Net operating revenues rose to $3.437 billion, up 16.7% compared to a year earlier.



• First quarter net subscriber additions include 414,000 post-paid retail, 420,000 from wholesale channels and 138,000 from affiliates. At the end of the period, PCS wireless was serving a total of 21.3 million customers.



• Churn was 2.9% this quarter compared to 3.1% reported a year ago, and 2.7% in the 2003 fourth quarter.



• At the end of the period more than six million customers were subscribing to Sprint PCS data services, including more than four million Sprint PCS Vision customers. For the full quarter, data contributed just over 6% to overall ARPU.



• CAPEX for Q1 was $412 million, compared with $187 million a year ago.

For Sprint's Local Division

• Net operating revenues were $1.506 billion, a decline of 1.7% from a year earlier. Operating income was $446 million, down 3.5%



• Total access lines declined 2.2% from the year-ago period.



• The local division ended the quarter with nearly 350,000 DSL customers.



• CAPEX was $209 million, down 25.6%

For Sprint's Global Markets Division

• Net operating revenues declined nearly 7% to $1.91 billion from $2.05 billion a year ago. Adjusted Operating Income for the quarter was $23 million compared to $4 million in the year-ago period



• In the quarter, total voice revenues decreased 8% from the year-ago period. Consumer voice revenues declined 21% while business voice revenues, including wholesale and affiliates, declined by nearly 5% from the year-ago period.



• Data revenues decreased 2% from the first quarter of 2003, and 2% sequentially. Frame Relay, ATM and Private Line services each grew modestly on a sequential basis. In the quarter, dedicated IP revenue rose 10% year- over-year and 8% from the fourth quarter of 2003, driven by gains in Global IP service. Overall IP revenues continue to be impacted by declining dial IP usage and Sprint's exit from the Web Hosting business.

Overall Guidance

• On April 23, 2004, Sprint will recombine its two tracking stocks, and each share of PCS stock will automatically convert into 0.5 shares of FON stock.



• Total net operating revenues are now expected to grow 3 to 4% in 2004 versus previous guidance of 2 to 3%.



• Sprint's total net debt now stands at $16.4 billion, down by $296 million for Q1.

http://www.sprint.com

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EarthLink Adds 98,000 BB Users for 1.2 Million Total

EarthLink added 98,000 net subscribers during the first quarter and ended the quarter with approximately 5.3 million paying subscribers, an increase of 283,000 subscribers, or 5.6%, from a year ago. During the quarter, the company added 98,000 broadband subscribers, ending with approximately 1.2 million broadband customers, up 30.1% from a year ago. During the quarter, EarthLink also added 99,000 net new subscribers at PeoplePC Online, the company's value-priced narrowband service, while losing an approximately similar number of subscribers in its more mature premium narrowband service. The company ended the quarter with approximately 4.0 million total narrowband subscribers, equal to the number of total narrowband subscribers at the end of the first quarter of 2003.



Monthly subscriber churn was 4.5% in the quarter, up from 4.0% in the first quarter of the prior year. The higher churn rate is primarily due to the continued migration of premium narrowband subscribers to broadband access services, including those of competing providers, and the effect of early life churn associated with the higher level of gross subscriber additions in the last six months.



EarthLink's total revenues were $351.6 million in the quarter compared to $353.7 million from Q1 2003, reflecting a decrease of $6.7 million in equipment and related revenues and a decrease of $3.7 million in revenues associated with acquired prepaid PeoplePC subscribers, substantially offset by an increase of $8.3 million in service and advertising revenues.



Broadband revenues grew 26.0% over the prior year quarter to $102.5 million and represented 29.2% of EarthLink's total revenues. Narrowband revenues declined 10.4% from the prior year quarter to $227.1 million due to lower equipment revenues and acquired PeoplePC prepaid customer revenues described above and to the decline in premium narrowband subscribers, which was partially offset by the growth of the company's PeoplePC Online offering. http://www.earthlink.net

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Sprint and EarthLink Extend Partnership

Sprint and EarthLink signed a three-year marketing and sales agreement that builds on their six-year relationship. Under the new deal, Sprint and EarthLink will offer a co-branded high-speed Internet service to residential and small-business customers in Sprint's local territory, billed on a single monthly statement. Later this year, EarthLink will add to this offering a Sprint and EarthLink-branded version of Total Access, which will be sold by both Sprint and EarthLink. http://www.sprint.comhttp://www.earthlink.net

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New Serial ATA Specification Hits 3 Gbps

The Serial ATA Working Group has completed two new specifications. One centers on doubling the signaling speed for Serial ATA, the other on new cable and connector solutions to support additional applications and usage models.



The second generation Serial ATA signaling speed is specified at 3 Gbps -- double that of the first-generation Serial ATA speed. Among the features of the enhanced technology is that no new cables and connectors are required to support the higher signaling speeds. The new specification also defines a higher-power version of it for longer-haul external datacenter use. The external phy version defined in the specification only impacts box-to-box applications (not used as a direct disk drive connection) and has been defined to match the electrical parameters for the SAS phy.



A updated specification has also been completed for cables and connectors. There are several new cabling options: an internal multi-lane cable and connector assembly for streamlining connections between multiple internal host ports and internal devices or short backplane; an external consumer cable and connector solution that accommodates use of Serial ATA with external storage devices; and an external multi-lane datacenter cable and connector solution for connecting multiple Serial ATA channels between chassis in a datacenter. http://www.serialata.org

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Fuji Television and NTT Carry HD over Trans-Pacific IP

Fuji Television Network and NTT Communications have demonstrated first IP-based, non-compressed high-definition television (HD) transmission between Tokyo and Las Vegas at the National Association of Broadcasters (NAB) 2004 show. The two companies are exhibiting an HD non-compressed IP transmission system that connects Tokyo and Las Vegas by a 2.4 Gbps optical network. This system allows for an interactive HD transmission from both locations using IP. http://www.nttamerica.comhttp://www.fujitv.co.jp/en/

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FCC Announces Settlement in Nextwave Case

The FCC reached an agreement with NextWave Communications regarding the company's broadband personal communication service (PCS) licenses, which have been in dispute since 1996. Specifically, the agreement:

• provides for the immediate return of spectrum licenses that will account for at least 90% of NextWave's spectrum when licenses already sold to Cingular Wireless are taken into account;
  contemplates total cash recovery (including NextWave's down payment) of $1.6 billion if anticipated sales occur;



• results in a total cash and spectrum recovery of at least $4 billion based on NextWave's original purchase price;



• requires additional cash payments to the U.S. Treasury if there is a dramatic increase in value and sale of the spectrum that NextWave retains;



• extinguishes any potential claims for damages against the FCC and the U.S. government;



• builds in safeguards to ensure prompt and timely payment by NextWave; and



• avoids the use of debt instruments, which could be subject to further default and delay.

The deal will require approval of the U.S. Bankruptcy Court for the Southern District of New York. http://www.fcc.gov

• Last week, Cingular Wireless closed its transaction of 34 PCS licenses from NextWave Telecom. The licenses, covering approximately 83 million potential customers, are for spectrum primarily in markets where Cingular currently has voice and data operations.



• Under terms of the deal, Cingular paid $1.4 billion in cash, and obtained FCC licenses to operate on 10 MHz of broadband PCS (1900 MHz) spectrum in 32 of the markets and of spectrum of 20 MHz in the 1900 MHz band in Tampa and El Paso (Texas).

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AMCC Posts Revenue of $47.4 Million, up 24%

AMCC reported quarterly revenue of $47.4 million, up 24% sequentially from the $38.2 million reported in the preceding quarter, and up 136% from the same period last year. The pro forma net income for the quarter was $237,000 or $0.00 per share, compared to the pro forma net loss of $7.1 million or $0.02 per share in the preceding quarter.



AMCC recently announced plans to acquire 3Ware, a developer of high capacity Serial ATA (SATA) storage solutions, and IBM's 400 series of embedded PowerPC processors. http://www.amcc.com

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PMC-Sierra Readies its Packet Processors, Framers

PMC-Sierra announced production of its new line of HDLC packet processors and high-density T1/E1 framers, which address highly channelized router, multi-service switching and wireless infrastructure applications. These fourth generation devices build upon PMC-Sierra's multi-service switch line card solutions and enable scalable and flexible architectures in edge routers, multi-service provisioning platforms, and wireless radio network controllers and base station controllers.



PMC-Sierra said its new PM7310 FREEDM 336L, PM7311 FREEDM 84L and PM7312 FREEDM 32L devices are the industry's first high-level data link control, Point-to Point Protocol (PPP), Frame Relay (FR), and Multilink-enabled packet processors to support a separate high priority path to interleave latency sensitive traffic, such as VoIP, with fragments of large data packets. The FREEDM 336L supports up to 336 T1 or 252 E1 links and is ideal for channelized OC-12/STM-4 line card designs. The FREEDM 84L supports up to 84 T1 or 63 E1 links and up to 1024 HDLC channels and is targeted at nxDS3 and nxOC-3/STM-1 line card designs. The FREEDM 32L supports up to 32 T1 or E1 links and up to 1024 HDLC channels and is ideal for multiple T1/E1 line card designs. http://www.pmc-sierra.com

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Telstar Selects NexTone's Session Controllers

Telstar, which provides wholesale VoIP services to international carriers and retail services to small and medium business, is implementing NexTone's session controllers in its global network to increase its VoIP capacity and provide more efficient routing of its traffic. Telstar has deployed the NexTone Multiprotocol Session Controller (MSC) in its global switching center in New York, as well as its international switching nodes in Italy, Spain and Portugal, using capabilities such as dynamic call admission control, SIP/H.323 interworking functions and network address translation (NAT). The session controllers resolve incompatibilities between other carrier's VoIP devices while providing control to route, process and manipulate session media. Telstar is also using NexTone's Network Analysis and Reporting System (NARS) as an adjunct to its proprietary network management system. Financial terms were not disclosed. http://www.nextone.comhttp://www.telstar-usa.com/

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Japan Tobacco Outsourcers Network to Equant

JT International (JTI), the international operating division of Japan Tobacco Inc., has outsourced its telecom services in 47 countries, representing more than 240 sites, to Equant. As part of this outsourcing deal, Equant will provide a full set of communications services to JTI, including data services based on IP VPN, Internet access, managed security services, remote access services, LAN management, voice over IP and IP telephony, contact centers as well as fixed and mobile voice services. This deal also includes the transfer of JTI's telecom assets and its telecom vendors' contracts to Equant, representing several thousand pieces of equipment. The contract was valued at $144 million over six years.



Japan Tobacco had net sales of $36 billion in the fiscal year ended March 31, 2003. http://www.equant.com

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iBasis provides VoIP Interconnection for Russia's Golden Telecom

iBasis has established a direct VoIP interconnection with Golden Telecom, an alternative provider of integrated telecommunications and Internet services in major cities of Russia and other countries of the Commonwealth of Independent States (CIS).



The interconnection bridges iBasis' Cisco Powered Network and Golden Telecom's softswitch from MERA Networkshttp://www.ibasis.comhttp://www.goldentelecom.com.

• In March 2004, iBasis introduced a service designed to simplify and accelerate carriers' implementation of direct VoIP interconnections to the iBasis global network for international voice service. The company said its new DirectVoIP service provides rapid interconnects with international VoIP deployments in a matter of days, in contrast to activation periods typically measured in weeks for interconnects to TDM telecommunication carriers. iBasis provides enhanced call signaling control using standards-based H.323 and SIP, allowing operability to multi-vendor gateways, gatekeepers, proxy servers, session border controllers, softswitches and IP phones. Network peering is provided using signaling interoperability through protocol proxies and session border controllers.

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Tekelec's Taqua Group Lands 100th Switching Customer

Tekelec's newly acquired switching division (formerly Taqua) reached the 100th customer milestone with the purchase of its iX7000 Class 5 packet switch by Oregon-based Axxis Communications. Tekelec's "switch-on-a-card" platform is designed for carriers serving up to 5,000 lines. http://www.tekelec.com

• Earlier this year, Tekelec acquired Taqua, a provider of next-generation Class 5 packet switching systems, for approximately $85 million cash, plus the assumption of Taqua's outstanding options.

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SBC Offers $22 UNE-P Wholesale Rate to Competitors

SBC Communications unveiled a proposal that would provide its local phone company competitors the ability to lock in UNE-p wholesale rates of $22 through the end of 2004 throughout its 13-state service territory. The offer comes six weeks after a federal court rejected the FCC's wholesale rules and three weeks after the FCC urged the industry to negotiate on its own, which was followed by the first-of-its-kind agreement between SBC and Sage Telecom that set competitive terms for seven years.



SBC's letter said that the proposal would be available to any wholesale customer that responds to the company on or before June 15, the day before the FCC's wholesale rules are set to expire under the federal court ruling. http://www.sbc.com

• Last week, Qwest Communications and Covad Communications announced the completion of a three-year commercial line sharing agreement that provides Covad with access to local lines in the seven states within the Qwest region.



• In March, all five of the FCC Commissioners signed a letter urging the nation's telecommunications carriers and trade associations to begin a period of "good faith" commercial negotiations on UNE-p resale rates. The plea followed the ruling of a three-judge panel in the D.C. Circuit Court of Appeals that overturned the FCC's Triennial Review Order with regard to network unbundling rules.

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Toshiba and Cometa Networks Sign Wi-Fi Pact

Toshiba America Information Systems and Cometa Networks agreed to co-market Wi-Fi hotspot solutions. As part of the agreement, Cometa Networks will have the opportunity to incorporate some or all of the hundreds of Toshiba U.S. SurfHere hotspot locations into Cometa's expanding hotspot network. http://www.cometanetworks.com

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Ciena to Close its San Jose Offices

CIENA announced plans to close its offices in San Jose, California eliminating approximately 425 employees, or approximately 25%, of CIENA's current workforce by the end of the fiscal year. All ongoing product development and customer support activities currently based in San Jose will be consolidated on a product group or functional basis with efforts in progress at other CIENA locations. For instance, San Jose-based CoreDirector-related development will be consolidated with CIENA's ongoing CoreDirector development already taking place in Alpharetta, Georgia. and in Linthicum, Maryland.; ONLINE-related development will be consolidated with ONLINE activities underway in Research Triangle Park, North Carolina. CIENA also operates development centers in Acton, Massachusetts and Kanata, Ontario.



CIENA said the action would not impact its planned acquisitions of Catena Networks and Internet Photonics. http://www.ciena.com

• CIENA acquired San Jose-based ONI Systems in June 2002. Its other California-based acquisitions included start-ups Cyras Systems and Lightera Networks.

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MCI Emerges from Bankruptcy, Readies for Global IP Convergence

MCI emerged from Chapter 11 protection nearly two years after the resignation of WorldCom CEO Bernard Ebbers and the discovery of one of the largest accounting frauds in U.S. history. The company emerges from bankruptcy with about $5.7 billion in debt and $6 billion in cash.



MCI said the telecommunications industry is still going through a period of transformation with tough economic conditions. However, Internet usage is still increasing, people are communicating more often and in more ways and computing and communications are converging. MCI believes this convergence unquestionably plays to its core strengths.



"The real winner will be whoever is able to provide simple, converged products and services that can manage digitized content on a global IP network securely and reliably," Michael Capellas, CEO of MCI.



MCI's network includes 98,000-miles of fiber and spans more than 4,500 Points of Presence (POPs) throughout the world, with 3.2 million global dial modems and high-capacity connections to more than 96,000 lit buildings. It owns and operates more than 2,400 ATM, Frame Relay and voice switches, as well as 130 data centers in 22 countries on five continents. http://www.mci.com

• In February 2004, MCI selected CIENA and Siemens as key suppliers for a new Ultra Long Haul (ULH) DWDM optical network that will become the foundation by which all MCI services will be delivered. MCI is already carrying traffic on its first ULH network route deployment in the western U.S. and expects to complete its domestic network build-out over a three to five year period. MCI will use Ciena's CoreStream platform for optical ULH backbone that leverages software-configurable wavelength switching.



• In February 2004, MCI announced an expansion of its MPLS backbone using Cisco System's equipment. In the first stage of its network expansion, which is currently underway, MCI is working with Cisco on a multi-phased, edge-router deployment in 48 countries throughout North America, Latin America, Europe, the Middle East, and Asia Pac. Specifically, MCI is deploying the Cisco 10000 Series Router as its IP/MPLS Edge Label Switch Router for its Private IP service platform. Completion is expected by year-end 2004. In the U.S. alone, MCI plans to extend its Private IP network two-fold.



• Also in February 2004, MCI awarded a multi-year Global Master Purchase Agreement to Movaz Networks covering the rapid deployment of its next generation optical transport solutions across its global network. MCI began field deployment of the Movaz RAY product suite in 2002 and is already carrying live traffic in major metropolitan regions for a variety of applications including carrier-to-carrier, enterprise and core infrastructure applications.

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