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Sycamore signs Baby Bell deal; stock gains

BellSouth agrees to install the company's fiber-optic networking equipment in a new Florida facility, a vote of confidence that sends shares higher.

Local phone giant BellSouth has agreed to install Sycamore Networks' fiber-optic networking equipment in a new Florida facility, a significant endorsement for the small optical company that sent shares higher.

BellSouth will use Sycamore's optical switching gear in a new southern Florida network access point (NAP), an exchange facility where communications carriers transfer traffic. BellSouth will install Sycamore's SN 16000 and SN 8000 products, so-called intelligent optical switches.

Terms of the deal, described only as a "multimillion dollar" pact, were not disclosed.

Stock in Sycamore closed at $77, up nearly 7 percent during an otherwise down day for the broader markets. Sycamore shares spiked as high as $84.25, a gain of 16 percent, earlier Thursday.

The deal represents not only another significant source of revenue for Sycamore and the company's first deal with a regional Baby Bell local phone company, but it also offers the support of an older, more established communications company for the first time.

Sycamore's customers include Williams Communications, 360networks and Enron Communications, all of which are considerable--though newer--carriers building massive state-of-the-art fiber-optic networks.

"This is our first (Baby Bell) customer. Our other customers are the younger carriers, the more aggressive carriers," said Jeff Kiel, vice president and general manager of the core switching division at Sycamore. "What we've got now is a more traditional carrier that is deploying this for their competitive advantage."

The new network access point, dubbed the Florida Multimedia Internet Exchange, or FloridaMIX, is expected to link networks serving Latin America, the Caribbean, Africa and Western Europe.

Sycamore will begin shipping its gear shortly to BellSouth, which expects to complete construction of its Florida facility and network by the end of the year.