After a severe market beating late Tuesday, switch and router specialist
Foundry Networks Inc. secured a breather Wednesday when it signed on Lucent
Technologies Inc. to resell its entire family of ServerIron Web switches.
Financial terms were not made public.
In the co-branding deal, Lucent’s Internet Content Delivery and Distribution
(iCDD) division will man the helm, selling the switches through Lucent’s
sales force.
Lucent’s integration and consulting divisions will offer ServerIron switches
as part of their Internet traffic and content management solutions, spanning
server load balancing, firewall load balancing, global server load balancing
and content-aware cache switching.
Amid praise for Lucent, Foundry President and Chief Executive Officer Bobby
Johnson said the deal will help Foundry boost its leadership in the
switching arena, bringing in new customers.
After yesterday’s market beating, Foundry needs a pick-me-up.
The firm announced late Tuesday that it expects fourth-quarter revenue
ranging from $100 million to $110 million, which is below the $128 million
that some analysts had predicted. The network competitor that had
successfully battled Cisco Systems Inc. and Extreme Networks showed a dent
in its armor with earnings of 11 to 14 cents per share, a far cry from what
many analysts figured would be 24 cents.
With that news, Foundry’s shares dropped $13.75 to $16.88 at the market’s
close and were even lower in morning trading
at $15.38.
In a company statement, Foundry reasoned that the slowdown in spending on
personal computers and their components had spread to the networking
business. Merrill Lynch analyst Michael Ching said it was the first time
capital spending issues were impacting the switching solutions sector.
SunTrust analyst Eric Hindin was surprised by the warning. Hindin said
despite capital expenditure problems among Internet service providers,
Foundry should recover with its smaller enterprise agreements in the long
run.
While no one is doubting the need for switches to speed up audio and video
content over the Internet — ISPs such as America Online Inc., EarthLink
Inc. and AT&T WorldNet use Foundry’s products — Foundry could use the help
of Lucent’s brand in light of its stock woes, making Wednesday’s deal a
sound one.
The company could also seek out more customers in the enterprise and
entertainment arena, signing deals akin to the ones it signed with Novell Inc., LucasFilm and Yahoo Inc.