Cisco made several announcements relating to its optical transport portfolio at Supercomm 2001, building momentum with its IP + Optical portfolio. The Cerent 454-based product was at the heart of Cisco’s optical strength. The OC-192/STM-64 SONET/SDH option was formally unveiled, as well as a line rate Gigabit Ethernet line card that customers clamored for (the so-called G-series), and a four-port OC-12/STM-4 module to maximize drop slots for increasingly higher-speed service interfaces.
“Companies are supposed to come out of Supercomm having just announced new products, customer wins and all kinds of general puffery that will ensure peace among analysts and goodwill toward stock prices,” wrote beat reporter Evan Bass for Fiber Optics News after Supercomm 2001.
So what happened to Nortel? The Canadian manufacturer of telecommunications equipment, the second largest on the planet, witnessed its stock price plummet to a 52-week low on June 8, 2001 ($10.73 per share), down 88 percent from its 52-week high of $89 set in July 2000.
Nortel apparently did not impress the analysts or the media, even though the leader in optical fiber transport equipment made several new product and customer announcements.
“I think at Supercomm [2001] there was nothing really Earth-shattering coming from [Nortel],” said Chris Sessing, an analyst at Crowell Weedon. “No significant new products – there were certainly upgrades to existing products – but nothing that really knocked people’s socks off. Coming away from that, people just didn’t get the traditional warm and fuzzy feeling that they usually do.”
So what happened to Nortel? The Canadian manufacturer of telecommunications equipment, the second largest on the planet, witnessed its stock price plummet to a 52-week low on June 8, 2001 ($10.73 per share), down 88 percent from its 52-week high of $89 set in July 2000.
Nortel apparently did not impress the analysts or the media, even though the leader in optical fiber transport equipment made several new product and customer announcements.
“I think at Supercomm [2001] there was nothing really Earth-shattering coming from [Nortel],” said Chris Sessing, an analyst at Crowell Weedon. “No significant new products – there were certainly upgrades to existing products – but nothing that really knocked people’s socks off. Coming away from that, people just didn’t get the traditional warm and fuzzy feeling that they usually do.”
Unlike Nortel, a once-proud company that had lost momentum during the first half of 2001, with a recorded first-quarter loss of $385 million (12 cents per share) against revenues of $6.18 billion, Cisco’s Optical Networking Group was building momentum with its link to the company’s IP product lines and plans for the release of a new product, the soon-to-be-announced ONS-15600.
Cisco continued to dominate the Metro Optical Transport market in the first half of 2001 as evidenced with a number of industry milestones leading up to the usual flurry of Supercomm announcements:
• January 2001: Introduced the ONS 15327 Metro Edge Optical Transport system with almost 80 customers, including Timer Warner Telecom (tw telecom) and a large number of CLECs and Enterprise customers
• January 2001: ONS 15454 reached #1 OC-48 share in North America, with more than 600 customers
• January 2001: ONS 15454 reached #1 metro Gigabit Ethernet market share with over 3,000 ports deployed (with its first generation switched Ethernet capability)
• March 2001: ONS 15200 Metro DWDM solutions featuring the Qeyton product, gained traction with almost 100 customers
Following the successful launch of the OC-192 capability for the ‘454,’ accompanied by the line rate Gigabit Ethernet module (G-series), and high density OC-12 module, Cisco continued building momentum in July 2001 with the announcement of a 32-channel DWDM capability for the ‘454’ and achievement of OSMINE certification, allowing the product to be deployed by Regional Bell Operating Companies. John Colvin’s 1999 dream of securing this “license to hunt” regulated Tier 1 service providers had come true.
Cisco continued to dominate the Metro Optical Transport market in the first half of 2001 as evidenced with a number of industry milestones leading up to the usual flurry of Supercomm announcements:
• January 2001: Introduced the ONS 15327 Metro Edge Optical Transport system with almost 80 customers, including Timer Warner Telecom (tw telecom) and a large number of CLECs and Enterprise customers
• January 2001: ONS 15454 reached #1 OC-48 share in North America, with more than 600 customers
• January 2001: ONS 15454 reached #1 metro Gigabit Ethernet market share with over 3,000 ports deployed (with its first generation switched Ethernet capability)
• March 2001: ONS 15200 Metro DWDM solutions featuring the Qeyton product, gained traction with almost 100 customers
Following the successful launch of the OC-192 capability for the ‘454,’ accompanied by the line rate Gigabit Ethernet module (G-series), and high density OC-12 module, Cisco continued building momentum in July 2001 with the announcement of a 32-channel DWDM capability for the ‘454’ and achievement of OSMINE certification, allowing the product to be deployed by Regional Bell Operating Companies. John Colvin’s 1999 dream of securing this “license to hunt” regulated Tier 1 service providers had come true.
Meanwhile, Nortel couldn’t wait until year-end 2001 to cut its costs in light of the revenue reductions. The company said in June it would eliminate 20,000 jobs, or 21 percent of its staff. Nortel also stopped providing forecasts for upcoming earnings, a sure sign that its management had not got a handle on how bad their business had dropped off by mid-2001.
Evan Bass added, “UBS Warburg cut its profit and stock estimates for Nortel June 11, citing weak demand from long-haul network customers, some aging products and growing competition in the market for metro fiber optic equipment.”
Indeed, much of that competition came from Cisco and its service provider-savvy optical portfolio. The Cerent 454, now directed by Cisco, was indeed a giant slayer, eventually driving Nortel into bankruptcy.
Evan Bass added, “UBS Warburg cut its profit and stock estimates for Nortel June 11, citing weak demand from long-haul network customers, some aging products and growing competition in the market for metro fiber optic equipment.”
Indeed, much of that competition came from Cisco and its service provider-savvy optical portfolio. The Cerent 454, now directed by Cisco, was indeed a giant slayer, eventually driving Nortel into bankruptcy.