Technology Futurist

My Cousin's Cell Phone...

Ronald — Sun, 28 Aug 2005 18:12:10 -0400

One of the things I noticed here in Bucharest is the popularity of the Motorola V975) shown in the picture. It is currently offered by Connex, which was recently bought by the Vodafone Group (the biggest telecom deal in Romania in 15 years, announced in March 2005). Of course, my cousin has one and it looks pretty cool (there are lots of features, such as push-to-video, ringtones, and lots of multimedia applets). Amazing to see 3G so widely available and deployed. Other mobile providers in Romania include Orange and Cosmorom.

Global IP Sound Doing Very Well

Ronald — Sat, 27 Aug 2005 18:51:20 -0400

Blogging live from Bucharest, where I am for a few days for a short visit before going to give a talk about IMS in Cannes. GIPS' stock has been doing quite well, and that's because it secured now licensees such as Google, Yahoo! and Skype, which is quite impressive. The company's CODEC is on its way to becoming the most dominant one in the Internet VoIP market.

Cable VoIP Developments in Latin America

Ronald — Wed, 24 Aug 2005 00:58:24 -0400

Telcotrash (hat tip: Andy Abramson) reports on three VoIP MSO deals in Colombia, all with CedarPoint Communications. Interesting to see this unfold in Latin America. The three companies are: TVCable (in Bogota), Promision (in Bucamaranga) and Costavision (in Cartagena) - all together make up about 1 million subs.

Google Talk Up and Running

Ronald — Wed, 24 Aug 2005 00:27:05 -0400

As a few follow-ups to yesterday's entry:

1- Google Talk is up and running (if you visit http://talk.google.com, you will get automatically redirected). Thus far, I just had a quick test, and it seems to be find (albeit I could not see any different vis-a-vis Yahoo! Messenger as of yet, or Skype, for that matter - except for the connection to the GMail inbox, which Skype does not have ;-).

2- Yet another great coup for GIPS (Global IP Sound). As I mentioned before, the Swedish CODEC maker is a great company, and whoever buys it, will certainly cause a lot of disruption. IMHO, GIPS could be a very astute purchase for anyone willing to buy it.

It Looks Like it's Will Be an IM client...

Ronald — Tue, 23 Aug 2005 02:35:37 -0400

The resourceful Om Malik figures out a key part of the Google puzzle. He claims that the new product to be introduced by the search engine giant will be an IM client using Jabber (self-proclaimed "the Linux of IM" - hey, if their stuff works for AOL and Orange, then why not Google?). Om also points to a couple of extra hints: the talk.google.com URL, which redirects you to a google.com/talk with a 404 message (site not found) with a secure XMPP server waiting for connections.

In the meantime, here are the del.icio.us tags on Google & Jabber... this will be an ongoing thread.

Note: on the above link, there is a good piece by Sean Kerner highlighting, among other things that with the Blogger acquisition, Google also got some IM technology (called Hello).

ScreenCast Site Launched

Ronald — Tue, 23 Aug 2005 02:19:13 -0400

Robert Scoble writes about ScreenCastsOnline, a site that "contains downloadable and streaming screencasts to give you tips and hints in using many mac and web based applications. Windows users are welcome to access the screencasts as many of the demos will be cross platform or platform independent."

Definitely worth a visit...

More on the Google's Latest Equity Offering

Ronald — Mon, 22 Aug 2005 23:56:51 -0400

Andy Abramson had his own take today on Google's raising of $4+ billion (a non-trivial amount, as pointed out by Cody Willard in his note today - more than10% of GM's and Ford's combined market caps). I would have to agree with Andy - the proceeds of this sale are not for Skype (or Sk-hype, as Om affectionately refers to the company). Google's management is astute and too pragmatic for that. But then, Andy makes a whole plethora of telco plays (including a softphone SIP client, buying RIM or a directory service play).

Some folks (like John Markoff from the NY Times) suggest that Google will continue to make small R&D-focused acquisitions such as Android (click here for an interesting insight on that transaction, including a battle with Microsoft for being the leading software agent in the wireless search segment of China's mobile phone market).

Which gets us back to what will GOOG do with the money? Well, I still think that for M&A's of small companies (or even slightly bigger ones), cash is certainly not needed (instead the stock can be used as currency), or it if is, it certainly will not be anywhere near the vicinity of $4b billion.

So I dare speculate that it could very well be a telco play. But one that involves deployment of infrastructure. And which infrastructure? Wireless! Broadband wireless, be it WiFi, WiMax, or even proprietary. There is a big opportunity for the emergence of a third competitor that could offer triple play services in the US (not a telco, and not an MSO). If such a player comes up with a good, basic wireless service (one that is "good enough" will do), eventually complements it with an MVNO to offer voice, video and data and then prices it below the current oligopolistic equilibrium price between ILECs and MSOs, that will create some real competition and a major threat to the incumbents.

How much would it cost to set up such a nationwide network? For Wi-Fi, we have already some parameters (the City of Philadelphia Wi-Fi project will cost an estimated $10 million). For WiMax, the time horizon is much larger, so I really do not believe that the offering equity should have been now, unless Google management wanted to crystallize some of its winnings right now to build a considerable kitty of cash.

But hey, maybe this is too far down the road. Google is raising this money here and now, and so it could very well be that it could be to create its own IMMM (Instant Multi-Media Messaging) client application (allowing the sharing of video and audio files via video/audio streaming, IM, etc.).

Google Planning Something Big

Ronald — Sat, 20 Aug 2005 14:29:47 -0400

In a recent SEC filing, Google said it plans to sell up to 14.8 million shares (the highly connected and resourceful Om Malik even has some details about who is selling how much - just click on the Stalwart link in his article). Based on Google's closing price on Friday of $280.00, the company could raise $4.144 billion, or about 5.3% of its current market value. Paul Kedrosky speculates on what are some of the things that Google can afford with the proceeds of all this cash. There are some rumors about a possible telecom play - James Enck wrote a bit about those. Looks like Fred Wilson's is bang on with his "relevance vector" story - it's going to take more than just simply searching, and this is proof that Google's management is aware of this and will put some of those resources into play - the only question is why the cash when they could leverage the high current stock price? Stay tuned - this story is still developing.

Hiring Qualified People for Startups

Ronald — Fri, 19 Aug 2005 23:50:06 -0400

Tom Evslin wrote a great insight on a piece authored by Bernard Moon on who to hire for a startup. Both stories are great - I liked particularly the quote given by John Doerr of Kleiner Perkins: “You must ask, 'Are these the people I want to be in trouble with for the next 5, 10, 15 years of my life?' Because as you build a new business, one thing's for sure: You will get into trouble.”

Read it all!

What is Voice Over Internet Protocol?

Ronald — Thu, 18 Aug 2005 11:25:31 -0400

Another proof point of VoIP's uptake: VoIP has made it in Jeopardy! It wasn't the final Jeopardy question, and the contestant got the answer only partially right (albeit host Alex Trebek gave credit for the partial answer). I guess the next step is for a company like Vonage to get a famous sports star or actor to advertise its VoIP plan, and after that nobody else will deny that VoIP has really become a mainstream technology. Paul Brent wrote about the story on today's National Post (note: unfortunately, the story is only available to subscribers, so when you click on the link, you will be prompted for your username and password ID). Since I happen to be a subscriber, there have been some folks that have asked me to repost it, but I did not want to violate any copyrights, so I will not reprint the story entirely (unless somebody from the National Post can give me explicit approval for this). Here is just one excerpt with the details from the program:

VoIP, the tech-heavy acronym thrown about by telecommunications executives as shorthand for voice over Internet protocol, has gone mainstream in a big way.

This week VoIP served as an answer in the TV game show Jeopardy and the college-aged contestant providing the answer got it nearly correct: "Voice ... Internet ... protocol." Host Alex Trebek gave credit for the partial answer.

Lab 1127 Apparently Will be Gone...

Ronald — Wed, 17 Aug 2005 00:24:21 -0400

It is with a lot of sadness that I read on Isen.blog that the once famous Bell Labs Laboratory 1127 (the lab which developed Unix and that had brilliant minds such as Thompson, Ritchie, and Kernighan, among others) will be consolidated and disappear. This according to a "reliable source" via David Isenberg. I learned C with the aid of the famous Kernighan & Ritchie book ;-(. If this story is true, this is really some sad news... But it goes to show you how great Bell Labs was (and still is, despite this tough decision). That is why I am hopeful that all this work will carry on...

The Next Dimension of the Web

Ronald — Tue, 16 Aug 2005 23:41:59 -0400

Fred Wilson had a great post today about the evolution from the OS to the browser to the search engine to ... the new dimension whatever that is. Better put, Fred does not believe that search itself is not the ultimate component of the relevance vector. He believes in user preferences, behaviors, cached information (including cookies), etc.

However, there are many sophisticated Internet users that constantly clear out their cached browser information, or setup their browsers not to receive any cookies (yours truly included). For these types of users, the relevance vector needs to be made up by something else. And even if one could observe certain behavioral patterns, and start creating rules, there are many things that don't quite work on the web (for instance, imagine the difficulty in trying to guess estimate the probability of a user actually buying something on the web, depending on the number of ads he/she clicked on). So this will not be an easy endeavor by any stretch of imagination. But it is an interesting line of thought... and food for some future posts!

Podcasting, Part Two

Ronald — Tue, 16 Aug 2005 00:28:42 -0400

One day after writing about podcasting business models, interestingly enough, I came across this page while browsing PodShow.com. Apparently, I wasn't so far out with my "podcast" syndication idea - albeit I got the medium wrong. It is not public broadcast radio, but satellite radio! This makes perfect sense - satellite radio is the perfect medium for an amateur podcaster to reach star potential... or is it not? Some naysayers might point out to the fact that people like Howard Stern were already famous (via regular radio airwaves) BEFORE they migrated to satellite radio. But the truth is, how many amateur podcasters out there adhere 100% to all the FCC rules? Hence, maybe the career path for them is podcast-satellite radio- regular radio. Also, it is very interesting to see PodShow cooperate with Sirius (wonder if XM is doing something similar on the podcast front).

Firefox Usage - Up or Down?

Ronald — Mon, 15 Aug 2005 23:09:19 -0400

Broadband Reports has a story on Firefox - apparently, there is some controversy on the recent results that seem to indicate a slippage in growth for the Microsoft Internet Explorer alternative. However, if the blogsphere is any decent indicator, it is IE that seems to be slipping (e.g. Rodrigo's site). For TF, most of the viewership is still in various IE flavors, however, the actual share of Firefox has been holding steady in the 15-25% mark. Interestingly enough, there are a decent number of Netscape, Opera, Safari and Mozilla TF readers out there as well.

China Telecom, the Latest Skype Port Blocker

Ronald — Mon, 15 Aug 2005 20:33:57 -0400

Tom Keating had a post in which he references a Skype Forum chat that mentions that China Telecom is engaged in blocking Skype access:

Others in China piped in the thread that they weren't having problems accessing Skype's website, while another posted stated that as far as he knew, "Skype.com is blocked in Shanghai, the only place I know that skype.com isn't available in mainland." Regardless of which areas of China is being blocked, this is very disturbing news.

Fortunately, as of right now, according to the forum, they are only blocking access to Skype's English .com website, thus you can simply go to Skype's German site or another foreign Skype site to download Skype or setup a SkypeOut account. Assuming you can read the foreign language of course.

Only a matter of time before bureaucrats there figure out this loophole and close it. But while it is relatively easy for the Chinese to block SkypeOut, Skype is another matter altogether - with the peer-to-peer / supernode architecture, this is not an easy task. Which brings up the question on the supernode: I suspect that its selection is not arbitrary (i.e. Skype probably assigned a number of its own supernodes around the world right from the start, in order to be able to get some reasonable grade-of-service, particularly for paying customers). If that were the case, after some hacking, could there be a way to block communication if the IP address lies within certain ranges, no? It would probably take a bit of time to trace all of those, and by that time, a whole lot of the Internet would be blocked, but unfortunately, that probably already happens in some regions of this world.

Podcasting Business Models

Ronald — Sun, 14 Aug 2005 19:27:57 -0400

As a follow-up to yesterday's blurb about VCs investing in media (in which I quoted from a note written by Om Malik, where he used a couple of recent examples in Odeo and Podshow), I went around looking for some insights into what the winning business model would be for podcasts. Along the way, I found the same skepticism as Om (for instance, Dragos from @rgumente). But then, I found some interesting insights from down under in Australia. It turns Cameron Reilly also had a previous entry in his blog, where he referenced another insight from Doc Searls.

Fair enough, advertising is the usual modus operandi, but I echo Dragos' sentiment of how hard it is to accurately determine the return of an ad in an audio file. Just because the file was downloaded, it does not mean it has been heard (I confess that I have a few podcasts that I downloaded that I have yet to listen to - and plan to do so on my next trip).

So here's an idea: what about combining two current disruptive technologies - syndication and podcasting and coming up with "syndicated podcasts"? While this might seem funny, I am thinking a bit bigger than simply RSS here. The key advantage of a podcast is the low production costs associated with it. Why wouldn't it make sense for a progressive radio station to devote a certain percentage of time of its programming to a regular podcast show (that it can pick from a select list of recordings). If the radioheads believe the podcast producer is good and has some potential, they can carry the program on the air! It's simple, easy and a quick way to cut costs for those late night programs. And it might give some podcast enthusiasts a shot at making it to the airwaves.

The model would work more or less like this: the radio station compensates a certain percentage of the commercial proceeds to the podcasters (the producers and the folks enabling the production, doing the hosting, etc. would have to work out their take, but an agreement that is amenable to all parties can be reached). This could be made interesting: for instance, a program possibility could be the closest thing to reality TV in a radio station, or a sports satire, etc. If the podcast achieves a certain audience, it can then be turned into a "syndicated" radio program;-) The initial "syndication" is straightforward - just putting the MP3 file out there for anybody to listen. This can also be a great way for a radio station to add a bit of foreign content really cheaply. I would appreciate hearing some feedback on further refinements to this idea or other podcast models.

Hybrid Cars Pushing the Fuel Conservation Envelope

Ronald — Sun, 14 Aug 2005 13:26:57 -0400

The recent run-up in oil prices is definitely increasing the interest in fuel efficiency and environment-friendly solutions. One model discussed in this AP article is the Toyota Prius hybrid, which with some tinkering can achieve up to 250 miles per gallon. The idea is to leverage small amounts of electricity generated during braking and coasting - and store that in 18 brick-sized batteries. This boosts the car mileage with an extra electrical charge so that it could burn even less fuel. Even when it switches to the standard hybrid mode, this souped-up model can get the standard Prius mileage of roughly 45 mpg.

So why weren't too many of those models sold in Canada? According to this article, the first generation Prius (priced just at $30k) was a little larger than the Corolla, but cost nearly twice as much as a base Corolla model, so it didn't make too much sense for the average consumer. The 2004 edition, however, is much bigger than the original one ans still costs the same ($29,990). Throwing in the $1,000 cheque that the Ontario and BC provincial governments are offering, and the recent hike in gas prices, all of a sudden, this starts making a lot of sense.

Note: I saw that the US is also offering an added incentive for environmentally friendly car buyers (via a tax break), and don't know how that compares with the $1,000 Canadian offer.

Mac OS X on a PC?

Ronald — Sat, 13 Aug 2005 13:24:01 -0400

Yes, this is quite possible! My wife (the Mac person in this house) pointed me out the following Wired! article that gives more detail on a hack that allows users to bypass a chip designed to prevent the Mac OS from running on non-Apple PCs. The hacked version of the OSx86 bypasses a chip (the TPM, or Trusted Platform Module) whose purpose is to not allow the system to run on ordinary PCs.

VCs not Afraid to Invest in Open Media

Ronald — Sat, 13 Aug 2005 13:12:28 -0400

Om Malik writes about how the good times apparently are back on Sand Hill Road, with VCs starting to have the same appetite for risky investments as they did in the late 90's (except that perhaps these days, VCs are seeking only entrepreneurs with a proven track record and hence, they are getting better leverage). Here are a few recent investments that Om brings up in his note:

Kleiner Perkins Caufield & Byers and Sequoia - $8.5 million investment in PodShow

Charles River and other angels - pouring money into Odeo

Om argues that all these VCs are seeking for the next SixApart, but the key question is how many SixAparts are out there? Maybe one or two podcasting investments will pay off, but how many VCs out there are investing in that? From a pragmatic standpoint, it may really seem that some VCs are stepping outside their comfort zones, thinking that it's better to at least try to make something happen in domains such as RSS, social networking, etc. than to miss on the next bonanza.

Linksys' Skype Phone Details

Ronald — Sat, 13 Aug 2005 12:26:18 -0400

Tim Higgins has posted a lot of details on the Linksys Skype (CIT200)phone at Tom's Networking. Tim figures that the CIT200 will probably cost less than the Dualphone model (price tag: $140). He believes the CIT200 will cost around $100, given that it does not support both regular landline and Skype calling. The set should be available by this year's holiday season (wonder if it will be among the most popular techie Christmas gifts this year). By the way, CIT stands for Cordless Internet Telephony, which is the name that the kit will sell under. The kit will come with a base station that plugs into the USB port of a computer running Skype, a handset and a charger/base for the handset. Tim also believes that the CIT200 is an OEM from Ascalade Technologies, a BC-based design house. Read it all at Tom's Networking!

Latest MIT Media Lab Gizmo: the Jerk-o-Meter

Ronald — Fri, 12 Aug 2005 09:03:09 -0400

Here's an interesting project from the MIT Media Lab that has been getting quite a lot of recent acclaim (in publications such as Business Week, USA Today, etc.). It's called the Jerk-o-Meter, and it is being developed by a group of students led by Anmol Madan (shown in the photo - the same one that appeared on the USA Today story). The Jerk-o-Meter is a real-time application that analyzes speech patterns to determine whether or not a participant in a phone call is really paying attention to the speaker. It can use speech features for activity and distress to determine whether or not a person is really "being a jerk" on the phone. The current version runs in Linux on a Zaurus IP softphone (the Sharp Zaurus SL-6000 appears on the same photo showing Anmol). There are plans to add new features such as empathy. For more details on the features, please follow this link (and open the PDF file entitled "Voices of Attraction").

More Photos from the Motorola Q

Ronald — Fri, 12 Aug 2005 08:59:56 -0400

Gizmodo is reporting on more info being leaked about the Motorola Q (expected to make its debut early next year). So the market for smart devices will get really competitive, with models such as the RIM Blackberry 7100G (already launched earlier this year), the Palm Treo 670, and the Motorola Q, among others.

Wireline Erosion Happening in Europe, too

Ronald — Fri, 12 Aug 2005 08:23:39 -0400

James Enck writes about the results of a few Euro telco incumbents and they all have something in common: accelerating fixed line losses. Consider the following:

KPN annual rate of landline erosion: 5.3% (double from '04)

Swisscom fixed line loss: 4.2% (double the level from '04)

Deutsche Telekom: 4.4% (again, double from '04)

It will not be surprising to see these players look at innovative ways to stop those losses, and one of those will be fixed-mobile convergence (via IMS).

Skype Rumor Mill Continues to Spin

Ronald — Thu, 11 Aug 2005 12:53:26 -0400

Lots of stories in the blogsphere about Skype, including its imminent IPO. James Enck astutely points out how many versions of the same report came up (picking up on Om Malik's own skepticism). Business Week, The Independent, the original Robert Cringely post... and the list goes on.

Robert suggested that for a US$ 3 billion valuation, each Skype user is worth $150. Is that realistic? In my previous Skype valuation note, I wrote that an annual ARPU of $50 per user for SkypeOut would be reasonable, along with a guess-estimate of $40 for SkypeIn, for a total of roughly $90 per customer (assuming the same customers sign in for both SkypeIn and Skype Out). So even for the paying customers, $150 represents 2/3 more than $90. But wait - that was just for paying customers - and the key variable is figuring out what percentage of the overall Skype installed base can be counted on to regularly subscribe to these services (most folks are guessing single digits thus far). Therefore, the US$3 billion valuation is huge! So based on these arguments, I honestly join the skeptics list. Skype might go public or be sold, but, in a "rational market", it should not be worth these huge multiples, unless I am missing something here (well, considering the recent action on search engine Baidu.com and on portal Alibaba.com, one might say: "it's the market, stupid!" and start wondering if we are about to get into yet another speculative bubble - to temper those thoughts, I recommend a good dosage of "creative destruction" courtesy of Schumpeter ;-).

Last but not least, Mark Evans also has a Skype story today, and he talks about what might be motivating the company to talk to Morgan Stanley and explore its options (including possibly an IPO). He speculates on whether founder Niklas Zennstrom wants to cash in his gains now, considering the low barriers to entry or new potential threats (Mark mentions Michael Robertson's Gizmo service). If one were to buy into this last factor, I would also add Jeff Pulver's newly re-launched FWD (including the pulver.Communicator) to the list (and Jeff has one of the very best brains working on this project, namely Henry Sinnreich, the father of SIP, who recently joined Pulver.com after having a distinguished career at MCI). Another issue I would throw in the list is the fact that carriers will not stand pat (e.g. the BT Communicator).

lt's Official - Alibaba and Yahoo! Join Forces

Ronald — Thu, 11 Aug 2005 12:45:26 -0400

According to a press release on the Alibaba.com site, the Yahoo! rumors were proven to be correct and the pending deal mentioned here on Tuesday became official: Yahoo! and Alibaba.com Form Strategic Partnership in China.

Anonymous Comments Disabled...

Ronald — Thu, 11 Aug 2005 08:33:11 -0400

I had to disable anonymous comments due to unprecedented spam flood that Technology Futurist has been getting. Initially, I chose anonymous posting as the default as a way to encourage more comments, but unfortunately, this had to end. Lots of spamming going on in the blogsphere - this is a very sad development indeed. And spammers are getting more and more sophisticated every time, even creating "trackback spam" (on top of leaving spam comments). Scientific American had a good article back in April talking about spamming and even how it's made its way into the blogsphere.

Luckily, Blogware has created tools that allow bloggers to blacklist frequent spammers and even prevent them from using trackback spam. But there is the issue of what to do with IP addresses when one considers DHCP - with DHCP, a spammer's IP address can change and you might end up blocking some other reader in the future.

Carriers Have Faith in IMS

Ronald — Thu, 11 Aug 2005 01:35:27 -0400

I came across a good article written by Joan Engebretson on the hot subject of IMS. Joan interviewed carriers such as Bell South and Sprint, and the discussions were very candid about the expectations about the technology and whether it can be the delivery mechanism for next-gen services. For good measure, she also sought the opinions of vendors like Lucent and three analysts (including Tom Nolle, Tom Valovic and yours truly). It was actually somebody from Lucent who pointed me to the article, and it was a great read.

Excellent Paper on the Schumpeterian Wave

Ronald — Wed, 10 Aug 2005 23:56:19 -0400

A while back, Mark Evans and yours truly both read a Globe and Mail Saturday feature interview with Bell Canada CEO Michael Sabia. I meant to pick up on this thread but the work caught up with me, until today, while Googling around at work trying to uncover some Canadian telco data, I accidentally came across a great find. Like the saying goes - some great findings are truly accidental - and this was no exception to that adage. I discovered an editorial that Dr. Yves Rabeau wrote in the Financial Post back in August of 2004. Dr. Rabeau has impressive credentials, including a Ph.D. in Economics from my alma mater (MIT) and is Professor of Business Strategy in the Faculty of Management Science at UQAM and Director at the MEI - Montreal Economic Institute).

More importantly, at the bottom of the web page article, I discovered a link to an excellent discussion paper authored by Dr. Rabeau that I wanted to share with TF readers. The study is called "The Schumpeterian Wave in Telecommunications: Policy Implications", and it is a must read. At the time of my discovery, I made an instant connection to the Schumpeter reference in the Sabia interview with the Globe and Mail. Joseph Schumpeter (shown in the photo) struck again - the Austrian economist that so greatly influenced the economic development theory and coined the famous term "creative destruction". Schumpeter is not only Sabia's favorite economist, but also an inspiration for Dr. Rabeau's paper.

The "Schumpeterian Wave" is very well described in the discussion - long waves of innovations both create and destroy wealth. However, the net long-term effect is positive, because innovation eventually brings productivity gains which enhance the living standards in the economy. Of course these innovation cycles bring about some major turmoil - new firms and existing ones that can adopt the new technologies can thrive under this environment, whereas others eventually vanish because they cannot make the necessary adjustments.

But the central theme of the paper is to determine whether, if telecom regulation were in tune with the changing technology and the competitive landscape, this could have limited excesses such as the telecom speculative bubble. More importantly, the study also raises a few very important questions about what role the CRTC should pursue, and whether or not the goal of achieving a healthy level of competition in the local markets is a realistic one. The big question asked is - while trying to balance the interests of new competitors with those of the incumbents, will the CRTC end up in an "economic impasse" (where it seeks to create a competitive regime that is not naturally cost-effective) that will also curtail the flexibility of the incumbents?

Nortel: Is the Glass Half Full or Half Empty?

Ronald — Wed, 10 Aug 2005 00:17:36 -0400

Nortel finally announced its Q2 numbers, and they came in strong, jumping 12.6% QoQ totalling $2.86 billion, ahead of Wall Street estimates between $2.67 and 2.70 billion. Regionally, the numbers were strong in North America (US and Canada) but fairly flattish overseas.

Enterprise revenues jumped considerably (33% QoQ), due to the recognition of previously deferred revenues (~$100 million) related to specific PBX software upgrades in the U.S. and Europe. However, no mention of the much anticipated MPE9000 IP router (also known as the Neptune), and the book-to-bill ratio came a bit under what was expected (0.84). More importantly, almost all the Nortel enterprise voice (PBX/IP PBX) competitors had great quarters: Cisco, Avaya, Mitel, Inter-Tel and Aastra.

On the wireless side, CDMA was the bright spot, with performance being driven by EV-DO sales to players such as Bell Canada, Sprint and Verizon. However, the GSM revenues were lower, due to the completion of a major contract in Europe and lower than anticipated sales to BSNL. Finally, wireline saw declines in long-haul optical and traditional circuit switching for voice and ATM switches for data, although these drops were compensated by higher sales in VoIP switches and metro optical gear. It would have been nice to see more detail on the Verizon Class5 switch replacement project.

All in all, a good quarter, considering the recent turmoil, but there is $1.3 billion worth of debt coming due in early 2006, and more visibility on the company's strategy will be helpful for most investors. Despite the jump in revenues, Nortel turned in an EPS of 1 penny, so cost cutting will need to continue.

Discovery Landing a Success

Ronald — Tue, 09 Aug 2005 09:07:11 -0400

After being held up a day due to bad weather in Florida, space shuttle Discovery soared across the Pacific and over Southern California, going through a route just north of Los Angelese before touching down on Edwards Air Force Base. The flight path was egregiously adjusted due to safety considerations, particularly after the Columbia disaster, but this time around, there were no problems as the shuttle began enduring the period of maximum heating (roughly 20 minutes before landing).