AT&T Upgrades with Cisco
The telecom giant will upgrade its Internet backbone with Cisco routers and connect Internet hubs in 25 U.S cities to the upgraded network. NEW YORK (Reuters)—Top phone company AT&T Inc will buy core routers from Cisco Systems Inc to upgrade its Internet backbone network, helping to ease fears that slower economic growth will hurt network equipment sales.
The companies did not reveal the price or size of the order for Ciscos CRS-1 core routers, which direct massive amounts of Internet traffic for service providers, but AT&T said on Monday it plans to connect Internet hubs in 25 major U.S. cities with the upgraded network in the coming months. The announcement comes amid concern about weaker spending by U.S. companies after Cisco reported a fall in orders from banks and automakers last quarter. Investors have also pointed to competition from smaller rival Juniper Networks Inc, which recently launched a new core router called the T1600 to rival the CRS-1. Lehman Brothers analyst Inder Singh said news of the order, as well as an announcement that Cisco now has 100 customers for its high-end video conference system called TelePresence, showed the company was benefiting from a strategy of broadening revenue sources.
"Overall, these announcements support our belief that Ciscos diversified strength, led by carrier, commercial, emerging markets and advanced technology, could offset potentially slower spending by U.S. companies," he said. While Cisco is the worlds biggest manufacturer of routers, it has recently been expanding into a wider array of products including software and video. It has also been broadening its geographic reach, investing heavily in China and India. The CRS-1 sells for $500,000 to more than $1 million, depending on the configuration. Most buyers are large phone and cable service providers such as Comcast Corp, Deutsche Telekom AG and Sprint Nextel Corp. more>>>