Orckit Subsidiary Corrigent's Contract in Germany Means Success

by: Shlomi Cohen

Last week's contract win by Orckit Communications Ltd. (NASDAQ:ORCT) subsidiary Corrigent Systems Ltd. in Germany is apparently just as large as the company's contract with Japan's KDDI Corp. (TSE:9433) signed four years ago. Corrigent has delivered $180 million worth of systems to date under that contract.

Corrigent has now won additional support for its next-generation metro transport technology, and one should note that this is German support that follows Japanese support. In other words, we're talking about two top-tier technology giants, not the Third World.

In addition to the fact that the contract is a breakthrough into another country, it is also a breakthrough into a new field where Corrigent was not present before - cable television companies. Wednesday's press release implies that the end customer is one of Germany's largest cable operators, which leases its communications infrastructure from Deutsche Telekom AG (DT). The cable company in question plans to upgrade its infrastructure in order to provide triple play services in order to compete against its rivals, telephony and IPTV service providers.

During last week's visit to Tel Aviv, Cisco Systems (NASDAQ:CSCO) President and CEO John Chambers said services providers worldwide were gradually switching to Internet protocol [IP] based communications infrastructure. This is exactly what KDDI did four years ago, making it a pioneer in the field, when it picked Corrigent. KDDI has now been joined by a major German cable company.

I predict that later this year, Corrigent's problem will be how to achieve sufficient production capacity to meet the demand of potential customers, rather than winning new customers.
There is no doubt that KDDI will renew its orders from Corrigent in April, as part of the thickening of its network ahead of the launch of WiMAX services in a year from now.

I also believe that the negotiations with Global Crossing Ltd. (NASDAQ:GLBC), reported by "Globes" a few months ago, will result in an agreement, making the company Corrigent's third customer and its first major customer in the US.

A beneficiary of the contract is LanOptics Ltd. (EZCH), which is rumored to be the supplier of processors for the two Corrigent platforms that are the subject of the German deal.

Published originally by Globes [online], Israel business news - www.globes.co.il

© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.

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