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Will Ciena & Cisco Power Verizon (VZ) Metro 100G Rollout? - Analyst Blog

Zacks Equity Research
Updated

Verizon Communications Inc. (VZ) is on track to roll out its metro 100 Gigabit Ethernet business and reportedly, Ciena Corp. (CIEN) and Cisco Systems, Inc. (CSCO) have high chances of winning supply contracts in this regard.

The latest ethernet technological solution not only supports network traffic but also strengthens the deployment of 4G LTE services in high traffic areas and cloud usage, requiring higher bandwidth. Though Verizon has aggressively deployed 100G technology in its long-haul network, deployments in metro networks are still in the nascent stage. Thus, Verizon expects to see better network efficiency, enhanced latency and greater scalability in this space similar to that witnessed through deployment of the technology in its long-haul network.

As reported, the deal to upgrade metro networks at Verizon to 100G would most likely be split between two vendors. Notably, Ciena is expected to get hold of the majority of the business for Verizon’s upcoming 100G metro optical buildout. In addition, Cisco has also emerged as the other supplier likely to win a few metro 100G transport buy orders from Verizon.    

The analysts expect the metro rollout project to be worth about $200–300 million and assume that the chosen suppliers are likely to be called for trials before the deployment process begins in late 2015. They also anticipate significant rollouts from 2016 and envisage the deal to propel demand for a number of optical component companies that supply Ciena and Cisco.

Interestingly, the metro market is swiftly being redefined as the data center interconnection market. Of late, Ciena has strongly positioned itself for metro deployments with launch of new products. Also, in Dec 2014, Verizon announced that it has made use of Ciena's WaveLogic Photonics to provision its first 200G ultra-long-haul network.  

In 2014, Verizon had stated that Fujitsu Network Communications and Tellabs would be among its chosen suppliers for the metro 100G project. However, it seems that these firms are now falling behind in the race for this deployment along with Alcatel-Lucent (ALU) and Infinera Corporation (INFN).

Verizon is a global leader in 100G technology. The aforesaid metro deployment should build on the company’s leading position in the Ethernet market, thereby enhancing the end users’ experience.

Currently, Verizon has a Zacks Rank #3 (Hold).


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CISCO SYSTEMS (CSCO): Free Stock Analysis Report
 
CIENA CORP (CIEN): Free Stock Analysis Report
 
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VERIZON COMM (VZ): Free Stock Analysis Report
 
INFINERA CORP (INFN): Free Stock Analysis Report
 
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