Saturday, November 14, 2015

Amdocs on Network Optimization Competition

During Amdocs' Q4 2015 earning call, a question was asked about the network optimization market, to which the company has entered using several acquisitions - Celcite (2014, $129M, here) and Actix (2013, $120M, here)

[related post - "Amdocs CEO: 'Network Optimization Business is Slow'" - here]

[Q]  Tom Roderick [pictured], Stifel Nicolaus, Analyst

.. Eli. Curious for your additional thoughts on the competitive landscape and the network optimization business. You mentioned, I think, obviously you guys have been the disruptor in that market. I know Cisco has made some moves competitively. Some of the other NEPs have, as well. What are they doing, what are the traditional network equipment providers doing to protect their position, whether it's through pricing or bundling or things of that nature and how, what are they doing as a response to your disruption in the market?

[A] Eli Gelman [pictured], President & CEO. Amdocs:
To be honest, the first thing they do is they try to use a lot of fear against us, because we are the new guys in this area. They will try to slow this thing as much as they can. They will not announce it necessarily, but we see from everywhere. It's not like a specific company I can tell you all the guys that are producing a lot of boxes are trying actively to slow down this trend. I don't think they can do it. Even if they slow it down, it would not take, let's say, five years to come to full fruition. Maybe it will take seven years. You can not slow this down.

And I'll tell you more than that. Carriers cannot afford not to do it, because otherwise, the big guys will do it themselves. Level 3 will do it. Amazon would do it. They will build their own networks. And if the carriers are not careful, both, by the way, MSOs, the Comcasts and the Charter of the world, and the AT&T and Verizon of the world, if they would not do it, other people will do it for them or to them. So they have to do it.

The providers will try to slow it as much as possible. They say that they are investing in it and all of that. I don't think so. And every time that they see that they are a buying company, we've seen in several cases like this, they kill the company. In other words, they buy companies that have some momentum in this area and especially to kill them and not to build them. And we have a very different opinion. We have a different opinion that we have infrastructure and new components and new theory and new approach to this entire thing. And we'll see. We'll have the best man win.

See "Edited Transcript of DOX earnings conference call or presentation 10-Nov-15 10:00pm GMT" - here.


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