Data Networking & Wireline Equipment
Jess Lubert, CFA, Senior Analyst
Sector Rating: Data Networking & Wireline Equipment, Overweight
Event: Today, Verizon announced plans to begin deploying 100G technology in select US markets by end of second quarter 2011.
Impact: This announcement comes sooner than we had anticipated and appears to confirm Ciena and Juniper as the lead vendors for Verizon’s 100G deployment. Though Verizon previously deployed 100G in Europe (Paris-Frankfurt) using both Ciena and Juniper, we had anticipated a later start to the 100G build in the US with 40G temporarily filling in the gaps. However, with Verizon now expecting to begin deploying 100G across several US routes (Chicago-New York, Sacramento-LA, and Minneapolis-KC), we believe Verizon and other carriers faced with surging traffic volumes (particularly from mobile and video) may be accelerating network upgrade plans. We believe this bodes particularly well for Ciena, the leading provider of coherent 100G transport technology, as well as for Juniper, following recent upgrades to its router portfolio.