Tag: Networking

Networking outfits gutted by government cuts

Networking companies like Cisco, Juniper Networks and Brocade have been walloped by government cutbacks on big projects.

Cisco has warned that government spending cuts will include network equipment and will report its quarterly results on Wednesday. Investors expect things to be bleak. Already Juniper Networks and Brocade have warned that profits will not be as good as they hoped.

The results caught Wall Street on the hop as the cocaine nose jobs failed to realise that networking companies were so dependent on government contracts. Shares in networking companies have been involved in a big selloff.

This is odd as the analysts had been expecting high-growth because of the advent of multimedia streaming, smartphones and demand from China.

But with the US economy in poor shape and the debt ratings agency Standard & Poor’s downgraded the United States’ long-term credit rating due to Republican point scoring there are worries that things will get worse for networking companies.

Governments are likely to trim back projects further making networking outfits all the poorer.

Cisco’s John Chambers warned investors a year ago of “unusual uncertainty” in the economy and he has continued to be cautious about public-sector spending.

Cisco is overhauling itself and cutting jobs as it tries to revive growth, but if Juniper and Brocade are suffering then the problem must be more about broader economic issues plague the business rather than something that is Cisco specific.

Sterne Agee analyst Shaw Wu told Reuters that because of this environment, the service providers and corporations want to keep spending on a leash. A recent deal by US legislators to reduce the federal budget means the US government is also likely to buy less networking equipment. Cisco depends on government spending for about a fifth of its sales.

On the plus side, Wu was optimistic about the business’s long-term prospects as fast-growing adoption of smartphones and other mobile gadgets spurs demand for bigger and better networks and data centres. We guess it is just going to be a rough couple of years. 

Lightsquared changes plans because of GPS clash

US Telecom start-up Lightsquared has had to come up with new plans to build its high-speed wireless network because its technology interferes with GPS.

Philip Falcone and his Harbinger Capital Partners’ have gambled billions on the success of Lightsquared and now it has to use a different block of wireless airwaves for its network than originally planned.

The outfit still needs billions of dollars more funding to build its network and might suddenly find that investors are not returning their calls, some analysts told Reuters .

Lightsquared needed to launch fairly soon but now it will be delayed until next year.

Harbinger has put $3.1 billion into Lightsquared and is the largest single equity investor.

Lightsquared has written a cheque to satellite provider Inmarsat for an additional $40 million to prepare the alternative spectrum for use by early next year on top of its earlier agreement to pay Inmarsat $337.5 million.

Under the revised plan, Lightsquared’s CEO Sanjiv Ahuja told Reuters that customers would be able to test its service in early 2012 and launch commercial services around mid 2012.

But there is no guarantee that the new spectrum band it plans to use would not kill off GPS services. Ahuja said that they will be “largely free” of interference from more than 99 percent of GPS devices. It expects to find a way to fix the interference with remaining gear.

Ahuja said he would also try to fix the larger GPS interference problems in the original spectrum in time to use that spectrum in a few years.

GPS operators are still unhappy with the plan fearing that the alternative spectrum would still interfere with “many critical GPS receivers.”

Under the new plan, Lightsquared will use half the power to transmit wireless signals in its network to provide additional protection to GPS. 

Cisco writes off 550 jobs in Flip murder

Networking outfit Cisco has pulled the plug on its Flip camera business and given pink slips and P45s to over 550 workers.

Cisco bought Flip in 2009 for $590 million and surprisingly enough the gear was quite popular.

However Cisco has decided to re-jig its business after losing shedloads of cash lately and Flip never made the company enough money.

Cisco chief executive John Chambers wants to concentrate on five areas to get the outfit making cash again, and making cameras is not one of them.

Word on the street is that Flip generated $211 million in the last quarter and this was down by $19 million from the quarter before.

What is surprising is that Cisco did not try to flog the business, or if it did, it could not find a buyer. However the days of stand-alone consumer cameras appear to be numbered, as more of the instamatic market uses their phones to take their dismal snaps with the heads cut off.

Besides, smartphones have the ability to shoot HD video if the moment requires it. Soon there will be 3D, too.

The Flip camera was made by Pure Digital Technologies and was in the shops in 2007 long before smartphones became common place

Flip was one of the most popular stand-alone camcorders on sale through Amazon, and in 2008 it was estimated to have a 17 per cent share of the $2.4 billion camcorder market only behind Sony.

Part of the Flip’s problem is that it was the same size as a smartphone, they could not do anything else such as as upload to online sites or have Wi-Fi connectivity.

Cisco said that it will try to find the 550 new jobs within the company so there might not be former Flip staff sitting on street corners with a dog on a string, filming you as you drop money in their bowl.

HP accuses Cisco of betraying IEEE standard principles

HP has accused Cisco of abandoning its promise to work on unified IEEE standards.

Both companies were working on the IEEE 802.1Qbg and IEEE 802.1Qbh standards, which are not yet approved and won’t be until the end of 2011. The companies intended to keep them as close as possible to one another so that there is common ground in their networking businesses.

That has since changed, with Cisco broadening the scope of the 802.1Gbh specification so that a new tagging system is required, despite the fact that both companies had originally agreed to use VN-Tag, a Cisco product, for the standards. 

HP claims, according to NetworkWorld, this will force switch and NIC vendors to use two different tagging systems if they want to support both standards, defeating the whole purpose of the companies working in unison to deliver closely-matching standards.

Cisco claims that this change was not a deliberate one made by management but rather a shift driven by customer demand, a claim which isn’t washing with HP. Cisco said it needed a new tag anyway and that its approach offers more versatility and longevity.

HP said that both standards were intended for data centre use, but it could be thought Cisco’s divergence means the data centre focus has been removed, making it an “anywhere-type” specification. Cisco says it’s still intended for data centre use, but that things changed along the way.

Both companies are still working together on the standards, but Cisco’s move away from the original design could possibly strain relationships between the two for some time to come.

European Commission clarifies data protection reform

The European Commission released a handy FAQ today answering questions in regards to the up and coming reform of the EU’s Data Protection Directive, which was written up way back in 1995, an era where broadband did not yet exist. In addition, the Lisbon Treaty also gives the Commission to address data protection in the whole of the EU, including policies defining how police forces and judicial institutions should handle data when cooperating.

Social notworking sites such as Farcebook and Myspace as well as the mighty Google will find themselves in shackles, as the EC is working on new rules saying companies handling a user’s data will have to inform users how and by whom their data is processed and collected. Users will find a “right to be forgotten” bestowed upon them, which would force Facebook to permanently delete all and any data if a user would decide on deleting his or her profile.

The Commission also wants users to be informed how they are being targeted by behavioural advertising. “People should be aware when online retailers use previously viewed web sites as a basis to make product suggestions”, stated the official press release.

Lobbyists are going to have a field day soon, as the reform will also include the financial industry, as the commission is considering have other sectors inform users and customers “if their data has been unlawfully accessed, altered or destroyed by unauthorised persons.” Banks are rather touchy in this area, as it fears customers will run away if they find out their accounts aren’t secure – just like their four-digit protected debit cards.

Despite a EU-wide harmonisation of data protection rules, the Commission wants to strengthen national authorities to enforce the rules. National data protection bodies will have to work closer together, especially since user data is nowadays spread across a common market and beyond. In regards to third countries, the EC wants citizens of the EU to have the same rights in regards to their data as third country nationals have.

The Commission claims it will have worked out a new directive in 2011, which will then head off to the European Parliament and the Council of Ministers.

Optical networking industry recovering after dot com bust

The optical telecom network equipment market has finally recovered ten years after the dot com bubble burst according to new figures from iSuppli.

Revenue in the global optical telecom network equipment business is up this year, amounting to $13.5 billion, a 7.7 percent increase on 2009’s revenue of $12.5 billion.

Things are looking good for the next few years too, with iSuppli forecasting a boost to $22.1 billion in revenue by 2014, the highest figure amassed in the industry since its peak in 2000 when it gained $24.95 billion.

The market saw small spikes in profit in 2006 and 2007, but it slumped again in 2008 and 2009 when the recession hit home, but iSuppli believes the growth during those years was unsustainable anyway.

An internet boom is behind the massive growth in the optical networking market this year. The internet is growing at a compound annual growth rate of roughly 45 percent, according to iSuppli, and this phenomenal growth has led to a big demand for bandwidth. 

“During the final stages of the Dot-Com bubble in 2000, when everyone was sure that the boom would last forever, network operators sank billions into infrastructure equipment and fiber,” said Lee Ratliff, Senior Analyst of Broadband and Digital Home at iSuppli. “However, when the boom went bust, that fiber was left idle—becoming so called ‘dark fiber’—with much of it remaining unused for a decade. However, with the continued growth of the Internet, the industry finally has absorbed the excess capacity, lighting up the vast excess dark fiber from the bubble, and prompting companies to invest in upgraded optical equipment.”

China is one of the big players in this market’s recovery, encouraging its growth by providing tax incentives and financial subsidies for domestic fibre broadband equipment, optical chips and module manufacturers. 

This push will see broadband subscribers in China raising from 132.5 million in 2008 to 242.7 million in 2014, along with a doubling of spending on passive optical network equipment by telcos over the next four years.

Optical semiconductors and MEMS are also set to recover after almost ten years of stagnation. Optical network semiconductor revenue is expected to rise from $2.1 billion this year to $3.6 billion in 2014.

Optical MEMS will see substantial growth, with a compound annual growth rate of 17.2 percent between 2009 and 2014. Revenue in this sector is expected to rise from $111.2 billion in 2009 to $245.8 billion in 2014.

Cisco to report 28 percent sales growth turnaround

Cisco is expected to report a massive 28 percent increase in sales this Wednesday when its fiscal fourth-quarter results are released.

Those in the know reckon Cisco will report earnings of 42 cents per share, with a revenue of $10.9 billion, up from 31 cents per share and a revenue of $8.5 billion from last year.

These analyst expectations come despite a two percent drop in share value over the last three months due to economic uncertainty and fears for the technology industry. 

These worries seem to be abating, with more and more businesses starting to spend again to upgrade computers, operating systems, and other IT infrastructure, fuelling speculation that Cisco is set to win big time with its fiscal figures.

Analysts believe that Cisco’s primary areas of networking, enterprise, and services will all see significant growth and profit, primarily powered by a business turnaround. This may give some much-needed confidence to the technology sector to ensure other companies follow suit.

The recession may have bitten deeply, but in terms of market share and overall profit, it looks like  Cisco is going to sink its teeth in and bite back.