Broadcom's Q1 Revenues Rise 19% over Q4

Broadcom reported record Q1 revenue of $573.4 million, an increase of 19.7% from the $479.1 million reported for Q4 2003 and an increase of 75.1% from the $327.5 million reported for Q1 2003. Net income (GAAP) for Q1 was $39.9 million, or $.12 per share (diluted), compared with GAAP net income of $6.1 million, or $.02 per share (diluted) for Q4.



Broadcom reported revenue increases generated across all four of its business groups on a sequential and year-over-year basis. The strongest revenue growth on a sequential basis was experienced in the company's Broadband Communications and Mobile & Wireless business groups. http://www.broadcom.com

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UTStarcom Signs IP-DSLAM Contract with Versatel Nederland

Versatel Nederland BV has selected UTStarcom's AN-2000 IB IP-DSLAM for its broadband network. The companies said the equipment will provide for a migration of Versatel network from ATM to IP and will support triple play services. Financial terms were not disclosed. http://www.utstarcom.comhttp://www.versatel.com/

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Alcatel signs OEM Deal for Navini's Wireless Broadband

Alcatel announced an Original Equipment Manufacturer (OEM) agreement with Navini Networks covering its "Ripwave," non-line-of-sight wireless broadband platform.



Specifically, Alcatel will distribute the Navini Ripwave (Alcatel 7386 Wireless IP) products - base stations, element management systems and customer modems or PCMCIA cards - operating in the unlicensed 2.4 GHz, and the licensed 2.3, 2.5/2.6, and 3.5 GHz spectrum bands. The Navini solution, a combination of several advanced technologies including smart antennas and multi-carrier modulation, will be boosted by Alcatel's network integration capabilities and related professional services. http://www.alcatel.com

• Navini's broadband wireless access platform uses Multi-Carrier Synchronous Beamforming technology to provide non-line-of-sight access at broadband data rates for up to 1000 users per antenna face. The company claims up to 50% lower total-cost-of-ownership than DSL or cable networks, and up to 70% lower total-cost-of-ownership than previous fixed wireless systems.



• In April 2003, Navini Networks, a start-up based in Richardson, Texas, raised an additional $25 million in Series C funding for its non-line-of-sight, wireless broadband technology. Austin Ventures, Granite Ventures, Sequoia Capital and Sternhill Partners, all existing investors in the company, led the new round of financing. The company has raised $91 million to date.



• Navini Networks was founded in early 2000 by Wu-Fu Chen and Dr. Guanghan Xu, a former professor at the University of Texas at Austin, School of Electrical Engineering. The company is based in Richardson, Texas.

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Marconi Sees Sales Rise in Latest Quarter

Marconi's sales for the latest fiscal quarter rose 6% sequentially to £378 million on a constant currency basis -- in line with expectations and previous guidance -- or 1% after taking into account negative foreign exchange issues. The company reported continued improvement in operating performance and strong progress on its underlying adjusted gross margin, which is expected to be at the top-end of its 28% to 30% target. Sales of optical equipment to Telecom Italia were down, but more than offset by increasing SDH sales to BT. (BT accounted for 22% of Marconi's overall sales for the quarter). Telecom Italia's accelerated broadband deployment was the major contributor a substantial increase in Access Hub sales during the quarter. Sales of fixed wireless access equipment dropped slightly. Sales of Marconi's BBRS equipment and services rose 7% in the quarter due to a strong increase is sales to the U.S. federal government, including additional sales of the BXR-48000 multiservice switch router.



Marconi also confirmed its sales outlook for the coming quarter. http://www.marconi.com

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BT Announces Executive Appointments

BT announced the appointment of François Barrault as President, BT International, taking responsibility for BT's operations in Europe, Americas and Asia-Pacific, as well as leading BT's international sales and marketing activities. Barrault joins BT from Lucent Technologies Inc. where he was President of Lucent Mobility International having previously been President and CEO of Lucent Europe Middle East and Africa (EMEA) and, prior to that, senior vice president, international, of their InterNetworking Systems group. Before Lucent, he spent 5 years with Stratus Computer, which was acquired by Ascend Communications which itself was subsequently acquired by Lucent.



BT also announced the appointment of Roel Louwhoff as President Customer Service for BT Global Services, BT's international business services and solutions division. Louwhoff joins BT from ClientLogic Corporation, a leading international business process outsourcer in the contact centre and fulfillment industry, where he holds the position of chief operating officer - international operations. Previously, he was chief operating officer at SNT Group, a European call center provider, after working in Andersen Consulting's change management and CRM practice in Europe and North America. http://www.btplc.com

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AT&T Cites Competitive Pressures, Lower Earnings

Citing continued declines in long distance (LD) voice and data revenue, AT&T reported Q1 consolidated revenue of $8.0 billion, a decline of 11.1% versus the first quarter of 2003. The declines were partially offset by AT&T Consumer's bundled local and LD offering, as well as growth in several key markets of AT&T Business.



Operating income totaled $281 million, resulting in a consolidated operating margin of 3.5%. Operating income included $213 million of net restructuring and other charges taken during the quarter related to streamlining of the company's real estate assets as well as employee separations.



Net income was $304 million, or earnings per diluted share of $0.38, including a tax benefit related to a prior investment, losses on the early retirement of debt and net restructuring and other charges. This compares to net income of $571 million, or earnings per diluted share of $0.73, in Q1 2003 -- a fall of 47%.



AT&T Business recorded revenue of $5.9 billion, a decline of 9.1% from the prior-year first quarter. Pricing pressure, competition and demand weakness in retail LD voice and data negatively affected the unit's revenue performance. Declines were partially offset by growth in revenue from local voice and Internet Protocol & Enhanced-services (IP&E) revenue. Data revenue declined 10.1% from the prior-year first quarter. Growth rates were negatively affected by pricing pressure, competitive losses, weak demand and technology migration. IP&E-services revenue grew 5.9% over the prior-year first quarter. Growth for the first quarter was primarily driven by strength in advanced services, including Enhanced Virtual Private Network and IP-enabled frame.



AT&T Consumer recorded revenue was $2.1 billion, a decline of 16.2% versus the prior-year first quarter, driven by lower standalone LD voice revenue as a result of the continued impact of competition, wireless and Internet substitution and customer migration to lower-priced products and calling plans, partially offset by targeted price increases. These revenue declines were also partially offset by growth in bundled revenue which grew by 52% compared to the prior-yearhttp://www.att.com

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AT&T Reacts to FCC Phone-to-Phone VoIP Ruling

In response to the FCC's decision earlier this week to reject its phone-to-phone VoIP petition, AT&T expressed disappointment that the Commission chose "to protect the monopoly revenues of the Bell companies at the expense of consumers everywhere."



In a statement, Jim Cicconi, AT&T general counsel, said: "Rather than leave a legacy that promotes technology and innovation, this FCC will be remembered as the Commission that took the first steps to regulate the Internet despite its public statements to the contrary. The order will give real pause to any carrier that owns an IP network or otherwise innovates in reliance on FCC policies that today prove inconstant. It also raises serious questions about the consistency of the FCC's own statements and positions on the Internet and on investment in new technology."http://www.att.com

• The FCC ruled against AT&T in a case over whether telephone calls placed over the PSTN, converted to IP, transmitted over an IP backbone, and then terminated on the PSTN should be subject to access charges.



• The FCC found this type of phone-to-phone IP telephony "lacks the characteristics of an information service and bears the characteristics of a telecommunications service." In the ruling, the FCC also noted that it sees "no benefit in promoting one party's use of a specific technology to engage in arbitrage at the cost of what other parties are entitled to under the statute and our rules, particularly where, based on the record before us, end users have received no benefit in terms of additional functionality or reduced prices."

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Net2Phone Unveils Wi-Fi VoIP Strategy

Net2Phone disclosed plans to deliver a suite of wholesale wireless VoIP solutions for other service providers. Net2Phone's wireless VoIP solutions will offer service providers SIP-based hosted wireless telephony services that can be sold to their customers as an enhancement to their existing product set.



Net2Phone would route all calls over wireless IP networks to its SIP-based platform, which performs call management, provides Class 5 features, billing, provisioning and enhanced services and distributes the infrastructure required for interconnecting onto and off of the PSTN network. Net2Phone said its solution offers service providers an affordable mobile telephony solution with a complete set of features and functionality, including inbound and outbound calling with phone number selection, call waiting, caller ID and voicemail.



IDT Corporation plans to deploy commercial Wi-Fi phone service in a series of locations throughout the U.S. using Net2Phone's wholesale service. The Ironbound area of Newark, New Jersey will be the first area covered and will enable users in residential and affordable housing to bypass local phone companies and make domestic and international phone calls via a wireless connection to the Internet. http://www.net2phone.com

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Tekelec Sees Growth in Q1

Tekelec reported quarterly revenue of $78.9 million, compared to $55.0 million in the first quarter of 2003. On a GAAP basis, Tekelec's net income was $5.8 million, or $0.09 per diluted share, for the first quarter of 2004, compared to net income of $1.5 million, or $0.02 per diluted share, in the first quarter of 2003.



Network Signaling revenue for the first quarter of 2004 was $63.2 million, compared to $46.0 million in first quarter of 2003.



IEX Contact Center revenue was $9.3 million, compared to $9.0 million in first quarter of 2003.



Tekelec's next-gen switching business unit added six new customers during the quarter, with revenues increasing 13% sequentially. This unit's quarterly revenue was $6.4 million. http://www.tekelec.com

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China Backs Down on Wireless Authentication Standard

China agreed to indefinitely delay the implementation of its proprietary wireless encryption standard, called WAPI for wireless authentication and privacy infrastructure, following negotiations with U.S. government trade officials. WAPI had been expected to become a mandatory requirement for WLAN products in China beginning in June. http://www.doc.gov

• Earlier this month, the Office of U.S. Trade Representative (USTR) issued a report citing China's planned WAPI standards as one of the greatest obstacles for open competition in global telecommunications markets.

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Zhone to Acquire Sorrento Networks

Zhone Technologies will acquire Sorrento Networks Corporation, a supplier of metro-optical transport and access products.



San Diego-based Sorrento Networks' GigaMux product family consists of access, metro, and regional optical networking systems. Its customer base and market focus includes cable TV operators, telecom carriers, and service providers. Zhone said the acquisition of Sorrento's DWDM and CWDM products would expand its product portfolio and customer base.



Under the terms of the agreement, Zhone will issue 0.9 of a share of Zhone common stock for each outstanding share of Sorrento common stock, and each option, warrant and other security exercisable or convertible into Sorrento common stock will be assumed by Zhone and become exercisable or convertible into Zhone common stock, with appropriate adjustments based on the merger exchange ratio.



Separately, Zhone Technologies reported Q1 revenue $21.0 million, compared with $17.1 million for the first quarter of 2003. Net loss for the first quarter of 2004 (GAAP) was $13.4 million, compared with a net loss of $13.4 million applicable to common shareholders for the first quarter of 2003.



Meanwhile, Sorrento Networks reported quarterly revenue of $6.4 million, a 4.9% decrease from revenues of $6.7 million in the prior quarter, and a 24% decrease from revenues of $8.4 million in the same period a year earlier. Operating expenses for the quarter declined to $5.9 million, a 7.2% improvement over $6.4 million in the prior quarter,. http://www.zhone.com

In February 2004, Zhone Technologies acquired the assets of Gluon Networks, a start-up based in Petaluma, California for approximately $7.0 million. Gluon had been developing next-generation converged switching systems for service providers.


• In November 2003, Zhone Technologies completed its merger with Tellium, a publicly traded developer of core optical switching systems.

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UTStarcom to Acquire Telos for Mobile Packet Switch

UTStarcom agreed to acquire TELOS Technology, a privately-held company based in Vancouver, Canada, for its distributed mobile switching solutions for the rural, enterprise, and emerging wireless markets. TELOS' product portfolio includes the Sonata SE Softswitch, Sonata FS Feature Server, and Sonata OMC Operations Maintenance Center. The Sonata softswitch can function as an MSC server, SGW (signaling server/gateway), and IMG (intelligent media gateway.



The company's wireless systems have been commercially deployed in over 35 countries, delivering 2G, 2.5G and 3G services for CDMA2000, GSM and UMTS.



UTStarcom said the acquisition would expand its CDMA strategy by complementing its existing IP-based wireless product portfolio. The TELOS CDMA2000 softswitch can interface with Hyundai Syscomm's IP base station. The acquisition also gives UTStarcom the opportunity to deliver hybrid CDMA/PAS solutions where economics and demographics require, and enter markets where PAS spectrum and licensing is not available. TELOS' product portfolio also adds U.S. standards and existing CDMA interfaces to UTStarcom's CDMA product offerings. UTStarcom's existing mSwitch platform supports international standards and WCDMA for worldwide markets.



The deal includes an initial cash consideration of $29 million, and is subject to an additional payment of up to $19 million based upon the achievement of certain revenue milestones. This

• In March 2004, UTStarcom announced several agreements to extend its global wireless strategy. These include: (1) a deal with QUALCOMM for licensing CDMA and Wideband CDMA (WCDMA) subscriber and infrastructure equipment that will complement its IP-based Personal Access Systems (iPAS), Code Division Multiple Access (CDMA) Packet Data Server Node (PDSN), and 3G portfolio. (2) an agreement to acquire the CDMA intellectual property portfolio of Korean infrastructure provider Hyundai Syscomm, a pioneer in the CDMA marketplace.
  through a partnership with Panasonic, announced in November 2003, UTStarcom has begun development of Radio Access Network (RAN), Base Transceiver Station (BTS), Radio Network Controller (RNC), and other related telecommunications products for end-to-end 3G solutions supporting WCDMA and TD-SCDMA access technologies. Initial solutions are targeted at China, the world's largest mobile market, but the long-term plan is to extend 3G networking to other international markets. (3) a development partnership with IPWireless to develop end-to-end TDCDMA solutions for non-China markets.

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BellSouth Adds LD and DSL Lines, Loses Access Lines

BellSouth added 636,000 net long distance customers and 156,000 net DSL customers in Q1, offsetting continued access line declines. Consolidated revenues from continuing operations were $5.0 billion, 0.8% lower than the same quarter of the previous year. Income from continuing operations was $1.2 billion compared to $850 million in the same quarter a year ago. Operating free cash flow from continuing operations (defined as cash flow from operations less capital expenditures) totaled $1.1 billion.



Some highlights for Q1:

• Growth in revenues from long distance and DSL offset access line declines holding Communications Group revenues flat at $4.6 billion compared to 2003.



• Data revenues were $1.1 billion, up slightly compared to the same quarter of 2003.



• BellSouth added 156,000 net DSL customers for a total of 1.6 million at quarter-end.



• Total access lines of 22.1 million at March 31 declined 3.6% compared to a year earlier. Residence and business access lines served by BellSouth competitors under UNE-P (unbundled network elements-platform) increased by 301,000



• Operating margin for the quarter was 25.6% compared 26.3% for the full year in 2003.



• CAPEX was $635 million compared to $588 million in 2003.



• Cingular Wireless continued strong customer growth with 554,000 net cellular/PCS customers in the first quarter.

http://www.bellsouth.com

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Procket Networks Extends IPv6 Support, Security

Procket Networks announced a new software release that enhances the IPv6 capability of its PRO/8000 Concurrent Services Routers and adds new security features. The new features include support for PIM-SM Source Specific Multicast (SSM), IPv4/IPv6 output packet filtering, and packet filtering permit accounting for easier characterization of denial of service (DoS) attacks. http://www.procket.com/

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Yahoo! BB Selects UTStarcom to Expand 45Mbps ADSL Service

UTStarcom has signed an expansion contract valued at $18.6 million with Softbank BB for further deployments of its AN-2000 IP-based DSLAM. The platform is being used to enable the new Yahoo! BB 45 Mbps high-speed ADSL service to more than four million broadband subscribers in Japan.



Softbank BB reached more than four million subscribers by the end of March 2004. The company introduced 8 Mbps ADSL data service in September 2001, attracting more than 100,000 subscribers in the first month alone. In August 2002, Softbank BB introduced Japan's first 12Mbps service, which also provided subscribers with a personal mailbox, a homepage, and a wide range of value-added services.



Softbank BB is the first competitive carrier in the world to surpass the incumbent provider in market share. Yahoo! BB has achieved a dominant share of the DSL market in Japan among residential users, small and medium-sized enterprises, and small office/home office users. With high-speed content delivery made possible by UTStarcom's AN-2000 IB, Softbank BB believes it offers the highest performance of any service provider in Japan.



In April 2002, Softbank BB added its "BB Phone" VoIP service. Subscribers can place calls within the IP network free of charge, while calls terminating outside the network, including calls within Japan as well as international calls, cost only a fraction of competing services. BB Phone subscriber numbers reached more than one million users just 7 months after the service was introduced and currently has approximately 3.8 million subscribers. http://www.utstar.com

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Motorola Shows Latest Cable Modem Designs

Motorola unveiled two new cable modems that integrate capabilities such as VoIP telephony or wireless home networking.



The Motorola SBV5120 combines a multimedia telephony adapter with a PacketCable-compliant cable modem which was recently certified for DOCSIS 2.0 and 1.1, and EUR-DOCSIS 2.0. The device allows consumers to use their existing home telephone wiring to power two lines of voice service, and supports all class features.



The Motorola SBG940 cable modem combines an integrated 802.11g Wireless Access Point , an DOCSIS 2.0-certified / EUR-DOCSIS 2.0-certified cable modem, a four port 10/100 Ethernet switch and a firewall.

• Motorola has shipped over 17 million cable modems to date.

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New Consumer Coalition Defends the Universal Service Fund

A new "Keep Universal Service Fair Coalition" has been formed to make sure the FCC does not alter the way Universal Service Fund (USF) fees are collected. The Coalition, whose members include leading consumer, senior, disability and minority advocacy groups, believe that the current USF funding mechanism is equitable because it is based on customer usage (minutes used of long distance). The Coalition argues that any proposals to change the USF funding process to a connections-based system would be regressive and disproportionately hit low-income, residential and low- volume long distance users.



The Keep USF Fair Coalition noted that if a flat monthly connection charge is adopted, residential customers would pay the same as business customers and low-volume callers would pay the same as high-volume callers. The Coalition is asking the FCC to reject flat USF fees due to the detrimental impact it would have on low-volume users. http://www.keepusffair.org/

• Every year, the nation's universal service fund (USF) pays out approximately $673 million for low-income programs and about $3.0 billion to support high-cost rural services. There are additional programs to provide Internet access to schools and libraries, as well as to support rural health initiatives. The USF is paid for by taxes to interstate switched access minutes, which are now in rapid decline. Speaking at the VON conference last month, Robert Pepper, Chief of Policy Development at the FCC, said the old USF model is clearly not sustainable -- however, by his measure, VoIP is not principally to blame. Wireless substitution is having the largest effect.

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