Broadband Week Direct

Today's report from Web Editor Susan Rush

• Flag Telecom Files Chapter 11

• Lucent Cutting 5,000 More Jobs

• Comcast Delivers VOD To The Garden State

• Nokia Inks DSL Supply Deal

• Home Networks Move Beyond Early Adopters

• Juniper Posts 1st-Quarter Loss Of $ 46 Million U.S.

• Broadband Briefs

Flag Telecom Files Chapter 11

Flag Telecom Holdings Ltd. is following in the footsteps of rival Global Crossing and filing for bankruptcy protection from creditors.

The fiber-optic network company decided to seek protection under the safety blanket of Chapter 11 after a group of banks called in a $257 million loan -- money the company does not have.

Flag Telecom intends to continue with its operations during the reorganization, including providing core backbone capacity to traditional carriers, ISPs and other content providers.

The company is proposing a restructuring deal to its creditors in which Flag Telecom would exchange $1.25 billion in debt for new securities. Although the company is trying to work with its creditors, it is offering no assurance that an agreement can be reached to make the reorganization a success. If the plan is approved, most of Flag Telecom's shareholder value would be wiped out.

Flag first warned of financial troubles in February, saying that it may not be able to continue operating past 2003. In March it appointed Credit Suisse First Boston advise on its strategic options.

Lucent Cutting 5,000 More Jobs

By Ben Klayman, REUTERS NEWS AGENCY

Telecommunications equipment maker Lucent Technologies Inc. plans to cut about 5,000 more jobs than previously expected by the end of June because of the slowdown in the telecom sector, says a source close to the firm.

"It's not like a whole new program of restructuring. It's a lot of little snips that will get the company (staff) to more like 50,000 by the end of June," the source said yesterday.

Lucent officials declined to comment, and a spokesperson said the company would provide an update on its staffing levels when it reports fiscal second quarter earnings April 22.

The Murray Hill, N.J.-based company had 62,000 employees at the end of last year, and had previously said it planned to reduce that count to fewer than 55,000 by the end of June. The latest cuts would reduce the workforce to slightly more than 50,000, the source said.

Lucent's stock fell 11 cents to close at $3.92 (U.S.) on the New York Stock Exchange. Since the start of last year, it has fallen about 71 per cent.

Tuesday, Lucent rival, Brampton, Canada-based Nortel Networks Corp., warned its first-quarter revenue would come in lower than expected due to sagging demand.

Last month, Lucent lowered its fiscal second-quarter outlook, saying revenues would rise modestly, or up to 10 per cent from the previous quarter, compared with a previous forecast 10 to 15 per cent growth.

There are signs the struggling telecom spending market has not begun a long-awaited rebound as carriers such as Qwest Communications International Inc. and Sprint Corp., both large Lucent customers, have kept slashing spending.

The source said Lucent was still completing job cuts in Europe and the Asia Pacific under the original plan, but the company had found the additional cuts equally through attrition, shifting work to outside manufacturers and layoffs because of lower sales.

Lucent said last month it still expected improvement from the first quarter loss of 23 cents a share before one-time items.

The company also put off until 2003 its estimate for a return to profitability from the current fiscal year, and said the expected spinoff of its remaining stake in Agere Systems Inc. would be delayed until the third quarter.

Comcast Delivers VOD To The Garden State

Many Americans embrace the "I want it, when I want it" attitude, and cabler Comcast Corp. believes it can satisfy its New Jersey customers who think this way by delivery video-on-demand services.

The launch will give 222,000 New Jersey residents access to the VOD service. The company plans to expand its offering to other New Jersey residents in the future.

Customers will have access to new releases, classic movies and other special programming at a cost of $3.95 a movie. The service enables viewers to pause, rewind, fast forward and store movies for up to 24 hours from the time of ordering.

Comcast has three million VOD-ready homes within its 26-state service area.

Nokia Inks DSL Supply Deal

China Telecom is turning to Nokia to bring DSL high-speed Internet access services to the province of Heilongiang in China.

Although financial terms of the deal were not disclosed, Nokia will supply its Nokia D50e DSLM and network management systems as part of a Nokia broadband IP access system.

The D50e is designed to handle IP traffic, enabling operators to expand their broadband business using ATM or IP interfaces.

China is Nokia's second largest market after the United States. China Telecom controls more than 95 percent of China's traditional phone service market. Nokia says it is committed to developing wireless and broadband networks in throughout China, and has invested $2 billion in the country thus far.

Home Networks Move Beyond Early Adopters

The chance to share a home's broadband connection is the leading driver in the adoption of new home networking technologies, and the rise in the sale of residential cable/DSL routers is happening across nearly all segments of the market, according to a new report from high-tech research firm In-Stat/MDR.

The new survey, titled "Networking the Joneses: Examining End-User Adoption of Home Networks," reveals a surge in wireless networking equipment sales and an increased availability of low-cost home routers to enable broadband connection sharing, and that the technology is gaining wider acceptance across society.

Among the findings: 42 percent of respondents with a home network said broadband sharing was their primary network application. Also, the study pegged the 45-54 age bracket as the largest to own a home network, likely a result of increased ease of use and network management.

Finally, the report also revealed consumer comfort with buying home networking gear from a retailer -- 41 percent of respondents who plan on purchasing a home network said they would planned on buying home networking equipment through the retail channel.

-- Duffy Hayes, CED Magazine

Juniper Posts 1st-Quarter Loss Of $ 46 Million U.S.

Juniper Networks Inc., the Number 2 maker of equipment that powers the Internet, reported a first-quarter net loss yesterday, reversing a year-ago profit, because of weak demand for telecommunications networking equipment.
Juniper had a net loss of $46 million (U.S.), or 14 cents a share, compared with net income of $58.6 million, or 17 cents a share, in the year-ago quarter.

The latest results include charges of $13.6 million to amortize deferred compensation, $1.6 million for amortization of purchased intangibles and $ 30.6 million to write down equity investments.

Pro forma net income, excluding charges, was $423,000, or zero earnings per share, a sharp drop from $85.4 million, or 25 cents a diluted share, a year earlier.
Analysts surveyed by research firm Thomson Financial/First Call on average expected Juniper to report nil earnings per share, with individual estimates ranging from nil to earnings of 3 cents per share.

Sunnyvale, Calif.-based Juniper said revenue totaled $122.2 million, down 63 per cent from $332.1 million in the year-ago quarter. This was slightly below analysts' average forecast of $123.5 million.

"The critical objective for Juniper Networks is to position ourselves for the industry recovery," Juniper chairman and chief executive Scott Kriens said in a statement.

Network equipment makers are struggling as telecom carriers and service providers have for more than a year cut or held back on raising network gear orders.

These customers have been working through a glut of equipment inventory, contending with a slow economy and, in many cases, sorting out financial problems.
Number 4 U.S. local telephone company Qwest Communications International Inc., for instance, has said it would take as much as $30 billion in second-quarter charges and Williams Communications Group Inc., with networks link 125 U.S. cities, is weighing bankruptcy.

"Juniper will continue to talk about a very sluggish environment with low visibility," said Gabe Lowy, an analyst with Credit Lyonnais Securities.

"They don't known when, how, where and how much carriers are going to spend," Lowy said.

"Part of the reason why is the carriers don't know because their enterprise and consumer customers aren't really spending."

Broadband Briefs:

• Napster is trimming its staff again. This latest round of cuts will send 30 people packing -- leaving the company with 70 employees. "We remain committed to launching our new secure membership-based service, but we're faced with the hard decision to further streamline our operations," Napster CEO Konrad Hilbers said in a statement.

• Cisco Systems Inc. inks a deal to supply its next-generation 12000 routers to the Greek Research and Technology Network. The installation will enable the delivery of high-speed Internet access, e-Learning and video-on-demand.

• Verizon Communications is investing $425,000 to increase the capacity of its network in Dorset and Rupert, Vt. In May, the company plans to activate a SONET ring that will provide a multiple route for high-speed voice and data services.

• New World Network, a provider of high-speed bandwidth capacity, posts first-quarter sales of $28.5 million. The company's cable network interconnects 15 countries in the United States, Mexico, Central America, South America and the Caribbean.