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Sycamore unveils new hardware for efficient networks

The high-end networking upstart announces plans to deliver a new optical switch and says a European communications carrier will test the product early next year.

High-end networking upstart Sycamore Networks today announced plans to deliver a new optical switch and said a European communications carrier will test the product early next year.

The company unveiled the SN 16000, a software-intensive optical switching product designed to more efficiently direct Internet traffic. Iaxis, a wholesale telecommunications company based in London, plans to test the SN 16000 for use in its networks. Optical technology is used to transmit voice and data traffic over long distances on a network.

Sycamore shares gained more than 2 percent today following the news. Separately, investment bank Thomas Weisel Partners initiated coverage on the stock with a "strong buy" rating.

The start-up's new high-end switch seeks to satisfy the demands of emerging telecommunications carriers that crave more capacity and need to shuttle voice and data over a network at faster speeds.

Despite having only one revenue-generating customer, Sycamore has been a Wall Street darling since its stellar initial public offering in October.

Lehman Brothers recently set a price target of 300 per share for the company.

In establishing coverage of Sycamore, Thomas Weisel Partners described the company as "an early leader" in the optical networking area, a market that is young but could potentially be huge in a few years.

"In our view, the intelligent optical networking market could be one of the fastest growing areas in the communications markets," Thomas Weisel analysts Max Schuetz and Elias Moosa wrote in a report today.

The company topped analysts' expectations when it announced quarterly results last month.

Sycamore posted a first quarter pro forma loss, excluding one-time items, of $2.4 million, or 5 cents a share, on revenue of $19.5 million. For the same quarter a year ago, the company reported a net loss of $1.2 million, or 5 cents a share, on no revenue.

Lehman Brothers recently raised its fiscal 2000 sales forecast as a result of the company's strong first quarter.