Next-gen network delays hit Newport
Shares in UK network equipment manufacturer Newport Networks plunged by over 50 percent on Wednesday after the company revealed that a key deal with a major telco was proceeding slower than expected.
Newport was founded by UK telecoms billionaire Sir Terry Matthews. It makes a product called the 1460 session controller, which can be used in large telecoms networks to underpin Voice-over-IP (VoIP) services.
In a statement released to the stock market, Newport revealed that it had not, as previously expected, secured a deal with a major "tier one" telecoms operator. Back in early June, Newport had indicated that this agreement would be finalised before July.
In its announcement, Newport also admitted that it had "experienced procurement delays with other large next-generation network projects"
Senior Newport executives refused to name these operators on Thursday, citing confidentiality agreements. Several UK telcos have announced plans to build next-generation IP-based networks, including BT and Cable & Wireless.
One report on Thursday claimed that Newport risked running out of money while waiting for this deal to be secured.
John Ackroyd, finance director at Newport Networks, denied this on Thursday morning and said that the company had no plans to raise additional cash.
Ackroyd insisted that Newport's problems are essentially short-term, and predicted that the company would have better news to announce in the second half of 2006.
"We don't expect this procurement process to run into 2007," Ackroyd told ZDNet UK.
One source close to the company claimed that some senior managers could lose their jobs as a result of the delays.
Mike Wilkinson, vice president of marketing, declined to comment on specific job losses but confirmed that a "small number of staff" would be made redundant, and some contractors would also be laid off.
Wilkinson explained that large telcos will typically sign up a "prime system integrator" to help them build a new network, and it is that integrator who signs deals with companies such as Newport.
"This is a fairly classic situation.... we are waiting for negotiations to be concluded between the prime systems integrator and the tier one telco," Wilkinson said.