Telecom Ramblings

Content distribution giant Akamai (NASDAQ:AKAM, news, filings) issued its earnings report this afternoon, and they just blew past estimates. EBITDA of $100.3M, and normalized EPS(diluted) of $0.44 were all surprises to the upside, well above my own expectations.  Gross Margins of 71.4% showed no deterioration at all.  Revenue of $212.6M included $6.9M from the Acerno acquisition which I had not realized would be so large, but even discounting that [Read more →]

Savvis (news, filings) [a subsidiary of CenturyLink (NYSE:CTL, news, filings)] reported Q4 earnings this morning, and the verdict for the end of 2008 was pretty good. Revenues of $222.4M was above Yahoo’s estimates of $220.2, and up 2% from the third quarter. EBITDA of $52M was quite good, and positive earnings per share of $0.05 came as an unexpected bonus. As one might expect, Savvis’s good results came primarily from a big quarter of $83.2M in colocation revenues, up 6% sequentially and 33% over Q4/2007. Managed hosting was up slightly, and Network services down slightly – largely normal. In the fourth quarter, one could barely [Read more →]

Content delivery giant Akamai (NASDAQ:AKAM, news, filings) reports earnings after the bell today, so let’s take a look at where things stand.  Or at least, where we think they stand given the uncertain environment. The economic crisis is perhaps a bit less scary now than back in October when the financial world was imploding, but that is only because our eyes are now accustomed to the dark – it hasn’t gotten any lighter yet. But for someone like Akamai that has little debt, generates gobs of cash, and operates in a sector that is still growing despite the economy – it’s almost business as usual. They may be under siege [Read more →]

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Last week, the FCC demanded that Comcast (NASDAQ:CMCSA, news, filings) explain why their own VoIP service was immune from their congestion management system, whereas other VoIP traffic was not.  Their answer?  Comcast Digital Voice (CDV) is entirely separate from its High-Speed Internet (HSI), so of course it would not be affected by congestion there.  In fact, you can buy CDV without even buying HSI.  Discrepancy?  What discrepancy? [Read more →]

After years of trying to make standalone, outsourced VoIP into a viable business, Deltathree (OTCBB:DDDC, news, filings) has finally tossed the towel into the ring.  In a transaction announced today, the company will sell common shares giving 54% interest plus a pile of warrants to a buyer for a mere $1.17M.  The buyer is an investment fund called D4 Holdings, which is controlled by the owners of multi-level marketing (MLM) company ACN, Inc.  Precisely what the relationship between ACN and D4 is, I’m not sure, but for now I just think of the buyer as ACN.  ACN itself has a colorful history [Read more →]

Juniper Networks (NASDAQ:JNPR, news, filings) announced its TX Matrix Plus multi-chassis core router, and the big buzzphrase that surrounded it with great fanfare is virtualization.  By bringing virtualization to the world of routing, Juniper hopes to give its customers the kinds of benefits that virtualization has brought to the processing end of the datacenter business.  Juniper is not the only one thinking along these lines, Cisco Systems (NASDAQ:CSCO, news, filings) is there also.    But what does it really mean?  That’s a lot less clear to me right now, because it’s not at a stage where we can link [Read more →]

Does MagicJack have a femtocell about to launch?  Really?  In a comment on Telephony Online by founder Dan Borislow, it appears they are “putting the finishing touches” on a femtocell product.  It’s not the first mention of the product either, last May they said they were working on such a thing.  I have, of course, been skeptical of the company’s claims in the past, but I cannot deny that they continue to shake things up in the VoIP world.  But a MagicJack femtocell would make that pale in comparison, because until now the company has spent its time repackaging old technology in a masterful marketing shell.  [Read more →]

Charter Communications (NASDAQ:CHTR, news, filings), the fourth largest cable company in the US, is looking more and more like the next casualty of the recession.  The company has long been burdened by a debt load of over $20B, and has teetered on the precipice before yet through perseverance, creativity, and some very favorable credit markets has survived.  This time, however, they seem to have dramatically fewer options.  The credit crisis makes it increasingly difficult to see how they can pay the $1.9B in principle that comes due in 19 months. [Read more →]

I have been asked several times now for a comment on the broadband stimulus that is floating through Congress right now.  I must admit, I’ve been thinking about it and trying to write a post on the subject for a week.  Why so difficult?  Because I have very mixed feelings on the subject.  On the one hand I’d love to see more money spent in the sector, but I also don’t generally trust the government to spend it well.  The debate everywhere is about how much is enough, but how can we answer that if nobody is clear on what we are really trying to accomplish?  There are various [Read more →]

On Thursday, internet router giant Juniper Networks (NASDAQ:JNPR, news, filings) reported preliminary Q4 earnings. As with all telecom equipment makers, the effects of the economic crisis are front and center because of draconian capex cutbacks. Internet traffic may be growing steadily, but carriers and service providers have a good deal of leeway in the timing of their purchases to meet such demand and believe me they are going to use it.  Hence, I wasn’t the least bit surprised to see Juniper check in with [Read more →]

Internap Network Services (NASDAQ:INAP, news, filings) has announced they are bringing in Eric Cooney as its new CEO and President, and named him to the board of directors. Cooney, most recently president and CEO of TANDBERG Television, will be replacing outgoing CEO James DeBlasio.  The transition to the new leadership will be on March 16.  One might chalk this up to stresses from the economic crisis, but that wouldn’t be correct. [Read more →]

Optical provider Infinera (NASDAQ:INFN, news, filings) offered us a glimpse into the telecom equipment sector today as they reported Q4 2008 earnings.  Optical equipment companies get hit hard when recessions strike because they are very sensitive to carrier capex levels.  Adjusted GAAP revenues of $86.2M was far in excess of analyst estimates of $75.5M, and surprisingly up from Q3’s $80.9M.  Gross margins, however fell from 40.8% in Q3 to 34.6%, and EPS turned negative to $-0.07.  In a separate release, Infinera announced that OTEGlobe, the international arm of [Read more →]

Until now Comcast has taken the lead amongst cable companies seeking to rein in P2P and other traffic they have seen as deleterious to the health of their networks.  But now Cox Communications has announced its network management plans, and their effort seems to be more aggressive than the watered down version that Comcast retreated to in September.  What Cox wants to do is categorize traffic as time-sensitive and non-time-sensitive.  When the network is congested, they slow down the latter.  When the network is not congested, nothing happens. [Read more →]

One month after q disconnected SkyWi in a billing dispute, they seem to be at it again.  In late December, Qwest cut its connections to the fixed wireless provider claiming non-payment of some $1.7M that was tied up in a legal dispute.  The New Mexico PRC stepped into the fray within days, ordering them to reconnect within 48 hours.  Of course, it took about a week to get everything back to normal, and the PRC scolded both for letting things get this far.   Qwest said delays in reconnecting were caused by [Read more →]

Last week NTT America, the US arm of the Japanese giant NTT Communications (NYSE:NTT, news, filings), announced it had expanded its IPv6 backbone to five sdxc datacenters.  Of course IPv6 is the designated successor to IPv4, whose address space will run out completely in a few years.  What does that mean?  Just that IPv4 was designed long ago, when the internet we know today seemed unfathomably large.  [Read more →]

Following on the unspectacular yet solid performance of Verizon (NYSE:VZ, news, filings), telecommunications giant AT&T (NYSE:T, news, filings) seems to have had a similar quarter:  nothing spectacular, but the sky isn’t falling either.  Revenues of $31.1B weren’t spectacular but still respectable, and likewise EPS of $0.64 was basically inline with the street, it certainly does not appear to lend any support to the macroeconomic death spiral [Read more →]

Telecommunications goliath Verizon (NYSE:VZ, news, filings) reported Q4 earnings this morning, and at first glance things look passable.  Not blockbuster, but considering the state of the economy I don’t see any black eyes.  The spectre of increased landline losses has loomed large in this environment, but nothing really changed much in Q4.  Landlines in service declined by about 2.5% to 36.2M – a slower rate than in Q3 and pretty much in-line with what we were seeing before Wall Street collapsed. [Read more →]

Netflix (NASDAQ:NFLX, news, filings) reported fourth quarter results that beat all expectations yesterday.  Their subscriber count rose to 9.4M, a rather unexpected number since just last quarter they reduced the upper end of projections from 9.25M to 9.15M only to blow past both.  Revenue was $359.6M and from that the company managed to earn $0.38 per share.  But doesn’t Netflix sell to consumers who have spent the last three months cowering from the economy and deciding what to cut from their budgets?  [Read more →]

The international wholesale division of Deutsche Telecom AG (ETR:DTE, news, filings) entered the content delivery (CDN) business today, announcing a partnership with Edgecast.   They are the sixth carrier to enter the CDN marketplace in any substantial way, and the first based in Europe.  One wonders why they didn’t just buy Edgecast, which is about a hundredth or even a thousandth [Read more →]

In what has to be one of the more predictable job actions of this new year, Sprint Nextel (NYSE:S, news, filings) has announced the elimination of some 8000 positions as part of an effort to save some $1.2B in annual labor costs.  While this includes 850 that were going under a voluntary separation plan already, it is painfully obvious that most of the rest will be of the involuntary nature.  For all those out there who stand to be affected [Read more →]

There is a report that British Telecom (NYSE:BT, news, filings) is considering re-entering the wireless business, yet again.  It happens every now again, at one point last year they were thought to be considering a WiMax buildout.  This time, the rumor involves some sort of joint venture between T-Mobile and 3.  Of course, BT does offer mobile services, but as an MVNO.  They used to have a mobile arm, but that was split off, rename O2 and was later purchased by [Read more →]

Earnings season started last week, but for telecom and internet infrastructure the first big shoes to drop will be Verizon (NYSE:VZ, news, filings) on Tuesday and AT&T (NYSE:T, news, filings) on Wednesday.  Because they are so large, any effects from the economic downturn must show up in their results.  We can perhaps take their results as a barometer for the entire sector, upon which we can judge the smaller players and specialists.  Because they are so [Read more →]

Earlier today, the jury came back with a verdict in the CDN patent suit between Level 3 Communications (NYSE:LVLT, news, filings) and Limelight Networks (NASDAQ:LLNW, news, filings), declaring that Limelight did not infringe on either of the two patents.  The jury did not declare either patent invalid, but simply said there was no infringement.  Level 3 may still appeal the verdict and the appeals process could take a year or two, but this is a better result for Limelight than last year’s loss to Akamai (NASDAQ:AKAM, news, filings) with a $45M payout that is still under appeal.  [Read more →]