Alcatel Returns to Profitability, Upgrades Outlook

Alcatel reported a net profit in Q1 of EUR 80 million, with all business segments positive -- it's first quarterly profit in three years. The company also upgraded its financial outlook for the rest of 2004, noting that the prolonged decline in sales is now ending and that operating margins are improving due to the restructuring steps it has taken. Alcatel's overall sales for Q1 2004 were EUR 2.740 billion, compared with EUR 2.828 billion in Q1 2003, down 3% at actual exchange rate and up 2% at a constant rate. Income from operations amounted to EUR 80 million, compared with a loss of EUR (150) million in the same period last year. Net income (pre-goodwill) for the quarter was registered at EUR 234 million or diluted EUR 0.18 per share (USD 0.22 per ADS) and net income after goodwill at EUR 134 million or diluted EUR 0.10 per share (USD 0.12 per ADS).



"Our performance in Q1 2004 is a clear confirmation that Alcatel is on the right track. With the sales decline stopping, our margins can now benefit from the intense restructuring which has been carried out. We are pleased to see, in this traditionally weak quarter, positive operating income generated in all segments and our earnings per share getting back in the black , said Serge Tchuruk, Alcatel's Chairman and CEO. "At this point, we are upgrading our expectations of year over year revenue growth going forward, both for the coming quarters and for the full year 2004. For the second quarter, as well as for full year, we expect high single digit year over year sales growth at a constant EUR/Dollar rate, which translates into significant growth at the current rate."



Some highlights:

• Sales about stable year over year


• Gross margin up at 36.6% compared to 30.3% last year.


• Income from operations at EUR 80 million at 2.9% of sales


• A total of 5.5 million DSL lines were delivered during the quarter


• The IP service routing business added nine new customers in the quarter, making a total of twenty customers to date.


• Twelve new customers were added in the quarter for NGN/VoIP products


• While the optics revenue has not yet reflected the market upturn, nine new customers were added for the data-aware OMSN products and ten new customers in metro WDM.

http://www.alcatel.com

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Primal Offers Flow-based Management for VoIP

Primal Solutions announced a new release of its usage management solution for MSOs. The Connect IXC platform supports flow-based usage accounting for high speed data services and usage based billing for VOIP services on the same platform. Primal said its system enables MSOs to apply charges to specific service flows that were previously difficult to track, such as peer-to-peer traffic, through their network. MSOs can utilize flow-based accounting and rating for cable modem using a standards-based interface. The streaming delivery of usage data from the cable modem termination system (CMTS) is based on the Subscriber Account Management Interface Specification (SAMIS) for DOCSIS. Primal Solutions is headquartered in Irvine, California. http://www.primal.com

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nCUBE and Digeo Collaborate for On-Demand Solution for Moxi

nCUBE and Digeo announced an agreement to integrate nCUBE's nABLE interactive management software and video server with Digeo's Moxi software platform for deployment on Motorola's Broadband Media Center (BMC) 9000 Series media centers. The Moxi interface delivers consistent navigation features that provide viewers with access to thousands of VOD titles in the same way as they access the rest of their digital cable services. Throughout the Moxi Menu, VOD titles have prominent multiple placements alongside live broadcast and show listings making it easier for viewers to find titles and initiate the purchase process.



Adelphia Communications, the nation's fifth-largest cable television company, will trial the integrated solution in selected markets in the greater Los Angeles region starting in Summer 2004. http://www.ncube.com

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Carlos Slim Steps Down at Telmex, Son Takes Over

Carlos Slim Helú resigned as chairman of Teléfonos de Mexico (Telmex). He will be succeeded by his son, Carlos Slim Domit, who has been serving as co-chairman of the company. Telmex is Mexico's incumbent carrier and has 15.1 million telephone lines in service and 74,000 km of fiber. The company was privatized in December 1990. http://www.telmex.com

• In March, Telefonos de Mexico (Telmex) agreed to acquire MCI's 19% equity stake in Embratel for $360 million in cash. MCI's share in Embratel is a 19.26% economic interest and a 51.79% voting interest. Embratel offers a full range of telecom services across Brazil, including local and long distance telephony, advanced voice, high-speed data transmission, Internet, satellite data communications, and corporate networks. Its nationwide fiber network extends approximately 29,000 km.

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Cox Launches VOD Services with Concurrent's 4G MediaHawk

Cox Communications has launched VOD in two of its metro markets (New Orleans and Omaha) using Concurrent's 4th Generation (4G) MediaHawk On-Demand Platform. This represents the most recent launch of Cox Entertainment on Demand service for Cox Motorola-based cable systems. Concurrent's platform supports Movies-On-Demand (MOD), Subscription VOD (SVOD), Free-On-Demand (FOD), Long-Format Advertising (LFA), network-basked Digital Video Recording (NDVR) and high-definition VOD (HDVOD), as well other new applications and services. http://www.ccur.com

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PointOne Debuts Wholesale Residential and SOHO VoIP

PointOne is launching new VoIP services for the residential and SOHO (small office/home office markets) markets. PointOne will make the StarPoint IP service immediately available to cable operators throughout the U.S. PointOne has been conducting service trials since October. Since September 2000, PointOne has built out an advanced converged voice and data network that covers 75% of the U.S. population.



The residential broadband telephony service provides long distance and local voice, including e911, directory assistance and operator services • Enhanced features include call waiting, call return, call forward, caller ID/ID block • Voice mail: receive and check via toll free access or existing email • 3 -- way conferencing and a service provider web portal for automated subscriber activation and management. The VoIP service for small enterprises includes all the residential features, plus abbreviated dialing, call hunt, reservationless conferencing -- multiway, auto attendant, and free fax line. http://www.pointone.com

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RAD Introduces TDMoIP Solution for MSOs

RAD Data Communications introduced a unique IPMux product that provides voice and T1/E1 circuit emulation services over cable HFC/metro infrastructures. A second Vmux product combines TDMoIP with voice compression to very efficiently deliver T1/E1 commercial voice services over DOCSIS cable modems with greater resiliency to packet loss and significantly better bandwidth utilization than VoIP. RAD said its TDMoIP is transparent to signaling protocols, ensuring support for existing, rich PBX features sets, as well as carrier class 5 telephony features, including Centrex.
The company claims its compressed voice solution requires only 100 Kbps for a full T1 (24 Voice Channels) over DOCSIS cable modems. http://www.rad.comwww.TDMoIP.com

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Finisar to Acquire Infineon Fiber Optics Business

Finisar agreed to acquire Infineon's fiber optics business unit 135 million shares of Finisar common stock. The acquisition transaction implies a valuation of US$263 million based on the closing share price as of 28-April-2004. Following the transaction, Infineon will hold a 38% equity interest in Finisar. Infineon's fiber business is based in Munich, Germany. Finisar is based in Sunnyvale, California.



The acquisition involves the transfer of Infineon's fiber optic development, manufacturing, and certain marketing activities and approximately 1,200 employees. The Infineon Fiber Optics Business Unit develops, manufactures and markets a broad range of fiber optic datacom and telecom modules supporting the common MSA standards, BIDI components that allow bi-directional transmission on a single fiber for fiber-to-the-home applications (FTTH) and Plastic Optical Fiber (POF) components that are used in automotive applications, specifically, for media and safety systems.



"This combination will be an important step in the ongoing consolidation of the fiber optic market," said Thomas Seifert, CEO of Infineon's Wireline Communications Business Group. "In Finisar, we have found an excellent strategic partner with a mutual interest in securing the future of the Fiber Optics Business unit. As one of the largest pure-play optical components companies, the combined forces will be able to provide more flexibility, broader product portfolio and cost efficiency to meet our customer requirements."http://www.finisar.comhttp://www.infineon.com

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Corvis Reports $146.8 Million in Revenue

Corvis Corporation reported Q1 revenues of $146.8 million, generated primarily from communications services revenues recorded by its subsidiary, Broadwing Communications, as well as from equipment sales to the U.S. government and Qwest Communications. The Broadwing Communications services division contributed $141.7 million in recorded revenues in the first quarter. The remaining $5.1 million was generated from the company's equipment and equipment service contracts. Reported net loss for the quarter was $33.9 million, or $0.07 loss per share, for the current quarter as compared with a reported net loss of $47.0 million, or $0.12 loss per share, for the first quarter of 2003. http://www.corvis.com

• In March 2004, Corvis agreed to acquire Chicago-based competitive local exchange carrier (CLEC) Focal Communications for $210 million. The deal is comprised of approximately $101 million in equity to be issued to Focal's existing equity holders and the assumption of about $109 million of Focal's existing debt and other obligations.



• Focal Communications, which operates in 23 Tier 1 markets across the U.S., claims 4,000 enterprise and wholesale/carrier customers for its CLEC services. Focal also has its own metro fiber footprint in nine Tier 1 national markets. Focal expects to report annual revenues of approximately $320.0 million for fiscal 2003. As of December 31, 2003, Focal had cash and cash equivalents of $24.9 million.

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Nokia Powers Orange 3G Launch in Toulouse

Orange France has launched its first pre-commercial 3G network in Toulouse using a complete Nokia radio-access network solution. This is the first pre-commercial launch of 3G in France. In addition to Toulouse, Nokia is also supplying its WCDMA 3G network to the north, east and southwest regions of France. In coming weeks, launches of Nokia-supplied networks will take place in these regions and in the UK. Nokia is also providing its professional services for the project.



To date, Nokia is a supplier to nine of the 21 commercial WCDMA networks in the world. In addition, Nokia has 39 public 3G references and is rolling out 26 WCDMA 3G networks in 15 countries. http://www.nokia.com

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Cox Continues Circuit-Switched Telephony Rollout

Cox Communications is preparing to launch its Digital Telephone in Northern Virginia beginning next month to compete with the incumbent local carrier, Verizon. Cox will be using circuit-switched technology in Northern Virginia. Cox's Northern Virginia cable system includes franchises in Fairfax County and Fredericksburg. Cox said it is already the third largest local exchange carrier in Virginia, with existing service in two other Cox markets - Hampton Roads and Roanoke.



This marks the 13th telephony market nationwide for Cox. Cox Digital Telephone has more than 1 million residential and commercial customers across 12 telephone markets. http://www.cox.com

• In December 2003, Cox Communications launched its first VoIP-based cable telephony service in Roanoke, Virginia. The VoIP architecture provides lifeline service, including Enhanced 911 and features such as call waiting, caller ID and voice mail. Cox's self-managed VoIP architecture also supports number portability, thereby enabling customers to switch their existing phone number over to Cox Digital Telephone service.



• Cox Communications has implemented VeriSign's NetDiscovery Service to help ensure compliance of its VoIP-based cable telephony services with the Communications Assistance for Law Enforcement Act (CALEA). CALEA requires carriers to assist Law Enforcement Agencies (LEAs) in lawfully authorized surveillance. To comply, carriers often have to purchase dedicated hardware, have trained operation staff and are called upon to maintain connectivity with a variety of LEAs.

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