Small Telcos Might Not Be Enough for APA & Occam

Includes: APAT, OCNW, T, VZ
by: Robert Zenilman

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

How Niche Telecom-Gear Vendors Plan to Gain on Network Upgrades

Summary: Besides telco giants like ATT (NYSE:T) and Verizon (NYSE:VZ), there are about 1,100 small local telephone companies that have been upgrading their networks in order to provide television over their fiber-optic lines. Equipment suppliers that target these small telcos are also much smaller than major equipment provider such as Lucent (LU). APA Enterprises (OTC:APAT) and Occam (OCNW), niche suppliers to the local telcos, had sales last year of $15.7 million and $39 million, respectively (Lucent had $15.44 billion in sales). While spending on fiber upgrades and Internet protocol television (“IPTV” – technology to provide television over high speed Internet) equipment has been flat this year, analysts are expecting sales to at least double by 2010. Nevertheless, there are doubts whether these small equipment vendors can grow profitably over the long haul. According to Patrick Pfeffer, chief network architect for telecom consulting firm Detecon, “Telco TV is a game of numbers … Because of the scale issues, the suppliers will never be able to make money serving the rural companies alone." Read full article >
Related links: Fiber to the Home: A World of Headaches for ComcastAT&T's Project Lightspeed -- Too Little, Too LateNews Corp. Looks to Dump DIRECTV • Wikipedia: IPTV

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