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Friday, October 25, 2002 |
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• Riverstone, Tellabs settle suit • Financial news roundup: JDS, Arris, Insight • Court approves Knology reorganization plan • Charter's quarterly profits are lower than expected • Velocitus Broadband offers clients wireless options
Riverstone, Tellabs settle suit
Riverstone Networks Inc. and Tellabs Inc. have settled their legal spats that have been pending for more than a year. In Aug. 2001, Tellabs filed a $10 million suit charging Riverstone with breach of contract, fraud, misappropriation of trade secrets and deceptive trade practices. In response to the suit, Riverstone filed a breach of contract suit against Tellabs, after Tellabs ended their alliance. The alliance called for the companies to jointly plan, develop and manufacture router-based CMTS headend products under the "Cablespan" brand. At the time, Tellabs said that Riverstone's products did not fulfill contract requirements for voice traffic and Riverstone failed to meet certain milestones under the deal. The companies have resolved their pending litigation on "mutually acceptable terms." Under the terms of the settlement, Tellabs has agreed to pay Riverstone a one-time payment of $12 million, Riverstone said in a statement. Terayon Communication Systems also has a deal to resell Riverstone CMTS gear under the “BE” brand and based on Broadcom Corp. chipsets, but has since rolled out home-grown "BW" versions of the equipment powered by silicon from Imedia Semiconductor, a chipmaker spin-off that's wholly owned by Terayon. Related stories:
Financial news roundup: JDS, Arris, Insight As the earnings parade continues to march on, results from JDS Uniphase Corp., Arris and Insight Communications Company offer a mixed bag. Despite posting a narrower first quarter loss, JDS Uniphase shares fell nearly 10 percent in midday trading as the network gear maker recorded its seventh consecutive quarterly dip in revenue. The company reported $193 million in net sales, down from $222 million in the previous quarter and $329 million a year ago. Its first quarter loss narrowed from $1.2 billion, or 93 cents a share a year ago to $521 million, or 37 cents a share. Looking ahead, JDS expects to record between $150 million and $160 million in sales in the second quarter. If the company's projections are on target, revenue will dip as much as 20 percent from the first quarter and fall below analysts' consensus estimates of $179 million, according to Thomson Financial. To pare expenses, JDS plans to make additional workforce reductions in the current quarter. Although the company did not outline specifics, it said the cuts will reduce operating expenses by $130 million annually. The company has roughly 8,000 employees. In July 2001, JDS employed 29,000. Further plant reductions also are expected. The company expects to reduce its facilities to 11. At its peak, JDS had 42 facilities. Although Arris posted a sequential increase in revenue, the company's shares plunged 20 percent to new 52-week low of $2.08, as the company reported slower deployments of customer premise gear for cable telephony services. For the just ended third quarter, Arris recorded revenue of $197.6 million, up from $194.1 million in the previous quarter. Cash earnings were 10 cents, excluding unusual items, which beat analysts' estimates by 4 cents a share. Sales from the broadband division increased from $124.1 million a year ago to $132.3 million. Despite an increase in revenue during the quarter, Arris said deployments of customer premise telephony gear, including deployments to AT&T Broadband, did not grow as rapidly as anticipated in the period, and "as a result we expect demand for new voice ports to slow as deployments catch up with recent purchases." Arris also noted "uncertainties" involving the pending Comcast-AT&T Broadband merger, but expected to benefit longer term from the creation of the cable giant. Meanwhile, Insight Communications posted revenue of $204.9 million in revenue, up 11.7 percent from a year ago. The company attributed the revenue increase to gains in high-speed data and digital services. During the quarter, Insight had 87,200 net digital additions and 39,700 net high-speed data additions. At the end of the quarter, Insight had 317,000 digital customers and 124,600 high-speed data customers. As of 12:19 p.m. EDT, Insight shares were up 40 cents to $9.50.
Court approves Knology reorganization plan Knology Broadband Inc. saw its first glimpse at the light at the end of its bankruptcy tunnel, as a bankruptcy judge approved the company's reorganization plan. The overbuilder filed for Chapter 11 bankruptcy protection from its creditors on Sept. 18 under a prepackaged plan. The reorganization calls for Knology to swap $444.1 million in 11.875 percent bonds due in 2007 for $193.5 million of newly issued 12 percent senior notes due in 2009 and a 19.3 equity interest in the reorganized company. The company resorted to a bankruptcy filing after failing to get 100 percent of its bondholders to support its original reorganization plan, as is required for a consensual exchange tender offer. "This is tremendous news for Knology, our customers and our employees," said Rodger Johnson, Knology president and CEO. "The completion of our restructuring plan puts us in a position to continue our growth to capitalize on our operational success." During its restructuring proceedings, Knology, which provides interactive voice, video and data services in the Southeast, has continued to operate and serve its customers. Closing of the restructuring plan is subject to certain
conditions, but the company remains confident that all conditions
will be satisfied. Knology has not announced a date on which it
hopes to emerge from bankruptcy. Parent company Knology Inc. and
its other subsidiaries have not been affected by the Chapter 11
filing. Related stories:
MPEG-4 software provider iVAST has let go 10 staffers in an attempt to better align its staff with market demand. "We didn't have a layoff," said Karen Willem, iVAST's senior vice president of finance and chief financial officer. "We did let go about 10 people, but plan to hire about 10 more in different areas," she said. The cuts were spread throughout the organization. While gearing up to launch its end-to-end MPEG-4 product, the company was engineering based, but now that the product is commercially available, iVAST is reassessing its ranks to focus on its sales and marketing efforts, according to Willem. The company employs roughly 70 people. The company is focusing much of its efforts in the Asia-Pacific region. "That geography is ready for our product now," said Willem. In August, iVAST formed a partnership with Oracle Japan and Sun Microsystems to deliver MPEG-4-based interactive multimedia services to Japan's cable, satellite, broadband, enterprise and digital broadcast networks. The partnership calls for iVAST to provide its MPEG-4 software, Oracle Japan to leverage its database architecture and network content distribution experience and Sun to provide the server hardware and technical support. A few months earlier, iVAST reached an MPEG-4 deal with Philips Consumer Electronics Co. to integrate the iVAST Experience platform onto Philips’ Nexperia silicon system architecture for set-tops, DVDs and other devices. It’s the first complete implementation of MPEG-4
audio and video decoding and systems-layer technologies in programmable
silicon, iVAST said. Related story:
French telecom gear maker Alcatel has inked a multimillion deal to supply 180,000 DSL lines in China. Zhejiang Telecom has selected Alcatel's Chinese subsidiary Alcatel Shanghai Bell. In May, Zhejiang Telecom tapped Alcatel for 80,000 lines. Alcatel's lines will cover the cities of Hangzhou, Ningbo and Wenzhou. The Chinese telecom is in its second phase of DSL expansion. The company is working to expand its current line capacity of 250,000 to 600,000. Alcatel has been working to establish itself as a market leader in China. According to research from Dell'Oro Group, Alcatel has captured 40 percent of the DSL market in China. To date, the company has supplied 360,000 DSL lines in the Zhejiang Province, which represents roughly 60 percent of that market, according to Alcatel. DSL has become the high-speed access of choice in China. In June 2002, China had 1.12 million DSL subscribers, and that number is expected to more than double by the end of the year, according to the China Center for Information Industry Development. Related stories:
Charter's quarterly profits are lower than expected
Charter Communications' third-quarter profits are more than 4 percent behind where they were predicted in August to be at this time, Bloomberg News reported Thursday. The St. Louis-based cable TV provider said earlier this month that it would fall short of the predicted 13.7 percent increase in operating cash flow, but didn't say by how much. On Thursday, Charter said its profit before some costs has risen by 9 percent. Dave Andersen, a Charter senior vice president, couldn't be reached for comment Thursday. Company executives cited its recent loss of subscribers to customer-service problems and the competition from satellite TV services, according to Bloomberg News. Customer-service problems were previously highlighted in an Oct. 7 story in the Belleville News-Democrat, in which former employees accused Charter of withholding cable disconnections to inflate the company's subscriber numbers. Andersen denied any wrongdoing at the time. The nation's fourth-largest cable company currently is under federal grand jury investigation for how the company accounts for costs on current and former subscribers. On Tuesday, Charter put Chief Operating Officer Dave Barford on paid leave because of the investigation. Barford didn't return News-Democrat phone calls to his home Thursday. Charter also faces at least nine class-action lawsuits nationwide that accuse it of issuing false and misleading statements during the past three years. Shares of the company fell 13 cents, or more than 12 percent, to close Thursday at $0.94 on the Nasdaq stock exchange. The stock previously plunged more than 31 percent to close at $1.20 on Tuesday and 10.8 percent to close at $1.07 on Wednesday. Related stories:
Velocitus Broadband offers Stockton,
Calif.,
Velocitus Broadband, a data communications provider and subsidiary of an Idaho utility, now offers business and institutional users in Stockton, Calif. the choice of fixed wireless and traditional wired connections. Velocitus has mounted antennas on the Sutter Building in downtown Stockton to offer service within an area as far as 10 miles distant, said Scott Galbraith, the Internet service provider's regional manager. That service provides a new alternative for companies that otherwise may be unable to receive broadband data service, said Michael Locke, president of the San Joaquin Partnership, a regional economic development agency. In at least one case, he said, "the kind of high-speed communication a company needed was not available in the physical location where they choose to locate, and Velocitus was able to meet their needs with their wireless system." More generally, Locke added: "They obviously represent another resource in terms of communications. They also represent another competitor with other providers who are already here." "There's plenty of room for competition," said Reid Cox, director of investor relations and business development for Pac-West Telcomm Inc., a Stockton-based provider of packaged voice and data communication services for businesses, as well as managed services for retail Internet service providers. He welcomed the presence of Velocitus in combating the dominance of the former Bell Telephone subsidiaries. "I think it's great, because it's our mission to provide more competition in California away from the incumbents," Cox said. Galbraith said Velocitus wireless service can be scaled to match a customer's needs, with connection speeds from 256 kilobits per second to 200 megabits per second. Standard, dial-up telephone service runs at a maximum 56 kbps, by contrast. Velocitus also offers traditional wired service, such as dedicated T1 and DSL connections. Stockton, where service was launched in the past couple of weeks, is the second California market for Velocitus. It began service in Fresno earlier this year. "It's Central California," Galbraith said. "That's where the growth is,... (and) competition is not as extreme as in Los Angeles or the Bay Area." The flat geography, without hills to block the wireless signal, is also a plus for Velocitus. Boise, Idaho-based Velocitus serves more than 30,000 residential and business customers in Arizona, California, Idaho, Nevada, New Mexico, New York, Oregon, Virginia and Washington. It is a subsidiary of IDACORP, created in 2000 with the purchase of Rocky Mountain Communications Inc. IDACORP is a holding company whose subsidiaries include Idaho Power, a regulated electric utility, and Ida-West Energy, which builds, acquires and operates electric power plants.
• Neptune extends MSN partnership Broadband applications and services provider Neptune Inc. has inked a deal with Microsoft to give MSN 8 Internet service subscribers access to Neptune's Mediashare service. Mediashare enables users to upload videos, build albums complete with audio tracks, and share the imagines with family and friends. The deal extends Neptune's existing relationship with MSN. Microsoft recently announced it would include Mediashare as an online video-sharing component of its Windows Movie Maker digital video editing software. • Telehouse names CEO Telehouse America has promoted Hideki Akazawa to president and CEO. The company provides neutral co-location space and services in the telecom, financial, Internet and corporate markets. Akazawa has held various positions since joining Telehouse in 1993, most recently as vice president.
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