Carrier Access Corporation

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Carrier Access Corporation

5395 Pearl Parkway
Boulder, Colorado 80301
U.S.A.
Telephone: (303) 442-5455
Toll Free: (800) 495-5455
Fax: (303) 443-5908
Web site: http://www.carrieraccess.com

Public Company
Incorporated: 1992
Employees: 460
Sales: $148 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: CACS
NAIC: 334210 Telephone Apparatus Manufacturing

Carrier Access Corporation is an equipment manufacturer that helps more than 1,800 telecommunications companies enhance service revenue, lower operating costs, and extend capital budgets by providing high-performance access and new service technologies. The company’s products and services are used by its customers to provide local and long distance voice, high-speed data and internet services to businesses, government, and other enterprises. The company’s digital equipment provides a “last mile” solution for the provision and management of high bandwidth services from service providers. Providing connectivity from service provider networks to end-user locations is necessary in order to reach large numbers of businesses and consumers using voice and high speed Internet access. This connectivity is facilitated by the company’s central office communications and customer-located voice and data communications equipment. Carrier Access’s products enable service providers to connect end-users to their network products in a cost effective manner and decrease transmission equipment and maintenance expenses. At the same time, the company’s products enable new service delivery, including integrated voice and high speed Internet access.

1990s Founding

Carrier Access was founded in 1992 when husband and wife Roger Koenig and Nancy Pierce moved to Boulder, Colorado, from IBM and ROLM in Silicon Valley to start a new company selling telecommunications hardware. “After 16 years in Silicon Valley,” Koenig stated in a October 2, 1998 interview with the Denver Rocky Mountain News, ”we came to get a better business environment, and a better living environment.” Although an early player in the telecommunications field, the company faced daunting competition from much larger firms. To survive, Carrier Access had to develop and market new products quickly. Initially, chief executive Koenig and Pierce thought they could survive by focusing on increasing their research and development budget. They soon realized, however, that they also had to start acquiring engineering talent and technology.

The company initially focused on making telecommunications products that helped businesses access high capacity phone lines, known as T1s. These lines offered better quality and faster transmission at a lower cost than traditional lines. AT&T originally began providing T1 service ten years earlier for businesses that required higher capacity lines for high bandwidth data applications. Carrier Access was able to establish a successful niche in this market. Not until June 1995, however, did the company introduce its first major product, Access Bank I, which offered digital connections for local and long distance carrier voice and Internet services. Access Bank enabled customers to convert a single T1 line into 12 or 24 standard analog lines for voice, facsimile, modem, and private network connections. The product allowed organizations to increase their phone lines without having to dig up new lines or install expensive new equipment. The Access Bank product was quickly adopted by major telecommunications carriers, utilities, Internet service providers, government entities, and universities to connect to T1 facilities. In 1996, the company worked to refine the Access Bank product solutions, garnering increasing attention from the communications industry. The introduction of this low-cost, highly reliable product quickly positioned the company as the most cost-competitive provider of T1 access solutions.

The company’s growth in its first four years led it to relocate three times and increase its staff. In January 1996, Carrier Access moved into a new 38,000-square foot facility in Boulder and doubled its staff to 70 by the end of the year. Demand for high-capacity lines had begun to take off in recent years with everyone from call centers to internet providers using them for networks. At the time, Koenig predicted that connections to T1 lines by businesses would grow by 50 percent in 1996 alone.

The 1996 Telecommunications Act: Change and New Opportunities

The company’s opportunities expanded considerably with the 1996 Telecommunications Act, passed by Congress to bring vibrant new competition to the $112 billion market for local phone service and the communications industry. To position itself for the new competitive era and keep pace with rapid demand for its product solutions, the company began adding key executives to its corporate staff. In 1996, the company hired Ken Garrett as vice-president for marketing. Garrett had 17 years of sales and marketing experience with telecommunications and data communications systems. He had held senior-level sales and marketing positions with XEL Communications, US West, and AT&T, and was vice-president for Astarte Fiber Networks. To further bolster its marketing division, the company added a product manager, Bob Wald, who had 14 years of experience in product design, development, and management in the data processing, data communications, and telecommunications industries. Gerry S. Sutton, who held previous marketing communications positions with Storage Technology Corp. and EMASS Inc., was recruited as manager of marketing communications. The company also added a director of strategic accounts, David G. Sant, who had 33 years experience in the computer and communications industry. Timothy Anderson, who had 13 years experience in financial management, was hired as the company’s corporate controller.

In addition, in July 1996 Carrier Access announced the addition of Joseph Graziano, former chief financial officer and board member at Apple Computer Inc., to its board. Graziano, who was an investor in Carrier Access, had served as chief financial officer for Sun Microsystems and treasurer of Rohm Corp. In a statement to the Boulder Daily Camera on July 16, 1996, Graziano said that he was attracted to Carrier Access because of the company’s strong growth potential. “The industry segment they’re in is very interesting and fast growing,” he said. “Their overall business opportunity is quite optimistic.” Graziano’s addition to the company’s board came just months after another high-profile board appointment. Ryal Poppa, former head of Storage Technology Corp., had agreed to join the company’s board in May. Co-founder and chief financial officer Nancy Pierce anticipated that having both Graziano and Poppa on the board would help the company gain respect from Wall Street if the firm decided to make a public offering.

With the new competitive environment unleashed by the 1996 Telecommunications Act, the company concentrated on new product solutions and development. In November 1996, Carrier Access released Access Bank II, which delivered twice the T1 capacity of the Access Bank I in the same size package, enabling service providers to integrate high-speed Internet service with multi-line voice service in a single unit. Access Bank II relied on the same 12-channel telephone line interface circuit cards as the Access Bank I. Nevertheless, each of the two T1 interfaces could accommodate current and future bandwidth requirements to provide a combination of facsimile, modem, high-speed Internet, voice, and PBX telephone services. Service providers came to rely on the flexibility of Access Bank II to provide multi-line voice and high-speed Internet connections to branch offices, small business customers, and medium-sized business locations. In combining voice with digital data over one or two T1 lines, bandwidth could be utilized more efficiently and at less cost.

In November 1997, Carrier Access also introduced its Wide Bank 28 DS-3 Access Multiplexer, enabling the connection of high bandwidth digital T3 (672 telephone line equivalents) network access lines to 28 T1 or 21 E1 service connections. The Widebank 28 allowed communications service providers, Internet service providers, and government customers to consolidate multiple T1s or E1s into T3 services to reduce monthly access costs. According to the company the Widebank 28 answered a tremendous need for multiplexing solutions that provided low-cost, managed access to the growing number of high capacity networks.

Company Perspectives:

Carrier Access is a leading provider of broadband digital equipment solutions that meet the rapidly changing needs of communications service providers. Our service provider customers include competitive local exchange carriers, incumbent local exchange carriers, independent operating companies, interexchange carriers, Internet service providers, and wireless mobility carriers. Our products are used by our customers to provide a range of services to businesses, government, and enterprise end-users, including local and long distance voice, high-speed, data, and Internet access.

In addition, Carrier Access sought strategic development and distribution alliances with other firms to increase industry penetration with its low-cost and highly integrated Tl and T3 access solutions. On April 22, 1997, the company announced a long term alliance with ADC Telecommunications. The alliance allowed ADC to market Carrier Access’s line of products, including Access Bank I and Access Bank II Tl voice and data multiplexers, as well as the Widebank 28 access multiplexer. The agreement also entailed a long term collaboration on the development of service delivery systems based on the core technologies of both companies. While Carrier Access represented a leading manufacturer of Tl and T3 network access solutions for the telecommunications and data communications industries, ADC specialized in providing loop access and transport systems to carriers for their delivery of high-bandwidth services to businesses and end-users. On June 30, Carrier Access also signed a North American distribution agreement with Graybar, based in St. Louis, Missouri. The agreement allowed Graybar to market Carrier Access’s entire product line to its end-user customer base throughout the United States and Canada. Graybar represented a leading provider of integrated solutions for both the telecom and datacom industries. The distribution agreement enabled Carrier Access to take advantage of Graybar’s breadth of telecommunications expertise and its large product distribution network that would help Carrier Access exploit new market opportunities.

To keep pace with its rapid expansion and customer demand, the company added another 13,000 square feet to its corporate headquarters in Boulder in December 1997. In a December 15, 1997 press release reported by Business Wire, Chief Financial Officer Nancy Pierce stated that “growth in new carrier equipment purchases has led our company to expand its manufacturing operations twice and significantly increase our engineering and support staffs. The additional facilities expansion is needed to keep pace with demand for our current Access Bank and Wide Bank 28 product lines, as well as to gear up for new products to be introduced in 1998.” Indeed, during the previous three years, Carrier Access had successfully established itself as a major supplier of digital access equipment for competitive local exchange carriers (CLECs) and long distance carriers. The company had delivered a steady stream of innovations for the digital “last mile,” connections from carriers to customer buildings. At the same time, explosive growth in the use of high-speed DS-3 connections was evidenced in the company’s high volume shipments of the Wide Bank 28. These shipments were fueled by the need for managed DS-3 connections for Internet carriers, wireless networks, and the replacement of individual Tl access lines by DS-3. The popularity of the Wide Bank 28 stemmed from filling the need for easily installed, protected, DS-3 connections plus advanced monitoring and testing capabilities.

During 1997, the company also made additional management changes, hiring Shri Dodani as vice-president of engineering and manufacturing. Dodani’s experience in high technology was extensive, having held senior positions at Aztek Engineering, Inc. and Nortel Asia South Pacific and Nortel Europe, and at Alcatel NSG. Carrier Access also appointed a new vice-president for marketing, Kevin Leibl, who held the position of general manager with Phillips Communications, where he developed the company into one the country’s leading distributors of wide-area networking and carrier transmission equipment. In addition, the company added Chris Rust as Director of Product Management. Rust had held previous positions with Comcore Semiconductor, where he established their product direction, corporate structure, and business plan, as well as with Sourcecom Corporation and US West Advanced Technologies.

In April 1998, the company introduced another innovation, Access Exchange, comprising the industry’s first nodal switching software for optimized Tl access. The product enabled long distance service providers to combine local voice services with long distance and high speed Internet access of their existing switch infrastructure while routing calls to the local exchange carrier for local calling, directory, 911, and other lifeline services. The product made digital access affordable for small and medium size customers by combining local, long distance, and data onto a single optimized Tl circuit.

Late 1990s: Success and Growth

On July 30, 1998, Carrier Access went public, offering 3 million shares at $12 apiece. The initial public offering, which was underwritten by CS First Boston, Hambrecht & Quist and Warburg Dillion Read, left 23.05 million shares outstanding. The company planned to use the $41 million raised by the public offering for general corporate purposes, including product development. The company had been increasingly profitable in the past several years, earning $1.7 million in 1997 and $1.7 million in the first half of 1998. In October 1998, the explosive growth of the company attracted the attention of the accounting firm, Deloitte & Touche, which named Carrier Access the fastest growing technology company in Colorado with a five-year growth rate of 4778 percent.

The company’s success was further illustrated by its 1998 year end financial results. Revenue for 1998 had increased to $48.1 million as compared to $18.7 million for 1997, an increase of 157 percent. In addition, net income had increased 773 percent. Roger Koenig—chairman, president, and chief executive officer—stated that revenue growth had exceeded expectations and attributed these results to significant growth in competitive carrier deployments of the company’s products. He noted that Carrier Access had started shipping a new product platform, the Access Navigator with GR-303 protocol switching capability. Koenig anticipated that this new host controller and data provisioning product would continue to drive demand for the company’s Access Bank products. With this latest product, Carrier Access now offered an end-to-end digital access solution for its competitive carrier customers, with equipment both at the central office and the customer location.

Key Dates:

1992:: Carrier Access founded and incorporated.
1995:: The company introduces its first major product, the Access Bank I service.
1996:: The company introduces Access Bank II Voice and Data Multiplexer services.
1997:: The company introduces Wide Bank 28 DS-3 Access Multiplexer solution.
1998:: Carrier Access raises $41 million in an initial public offering of common stock; the company is named fastest growing technology company in Colorado.
1999:: Company introduces CACTUS to provide expanded and integrated broadband services to customers.
2000:: Carrier Access acquires Millennia Systems, Inc. of Roanoke, Virginia.

In 1999, Carrier Access continued its pace of introducing new products, including Access Bank II/SDSL, which provided high-speed Internet access to customers’ LANs. The availability of the Wide Bank 28/STS-l offered high-speed STS-1 electrical connectivity directly to SONET Add/Drop Multiplexers and switches to deploy Tl services. As a result, the new Wide Bank product reduced the overall cost of implementing Tl services at carrier switch, co-locations, and on-net building locations. In 1999, the company also introduced the Access Navigator DCS Service Manager, designed to enable carriers to save local T1 access costs.

With these new innovations and growing demand for the company’s products, Carrier Access reported first quarter results of $21.7 million in revenue, an increase of 19 percent over revenue of $18.2 million in the fourth quarter of 1998. Koenig attributed part of this success to demand for the company’s new products, particularly the Access Navigator. More impressive was the sky rocketing price of the company’s stock. From July 1998, when Carrier Access had gone public with a $12 offering price, its stock had risen by 544 percent by March 1999 to a high of $77.31 per share. Nevertheless, by May 1999 the company’s stock price was trading down in the $30 to mid-$40 range. The stock had come under pressure due to announcements by the company’s competitors of equipment price reductions by as much as 50 to 60 percent. Although competitors began entering the profitable niche market founded by Carrier Access, the company continued to maintain its lead position in the market. The company’s strong market position was verified when Reg King, an equity analyst with Hambrecht & Quist, stated on May 28, 1999 in the Boulder Daily Camera that Carrier Access had established itself in a lead position in the market and that it “still has the best product family for competitive carriers.” Moreover, despite growing competitive pressure, Carrier Access had increased its workforce from 160 in 1998 to 215 by May 1999. To cope with internal growth, the company also added another 22,000 square feet to its building in Boulder.

In October 1999, Carrier Access was named the second fastest growing technology firm in Colorado in the Deloitte & Touche “Fast 50” program for Colorado—a ranking of the 50 fastest growing technology companies in the area. The company’s revenue growth of 6,396 percent over the preceding five years also assured that it was one of the fastest growing firms in the nation. By the end of 1999 the company was staking its future growth on its new Cactus line of products. One of these products, Cactus.lite, allowed customers to upgrade to the next level of telecommunications technology and accommodate an array of fast new transmission interfaces. The company saw the Cactus line of products as taking the telephone networks into the 21st century. Utilizing the Cactus products, however, depended on understanding Carrier Access’ array of other products. Up to this point, the company had focused on manufacturing equipment that would allow both established and new telephone companies to concentrate their customers’ voice traffic into fewer transmission lines. By condensing customer traffic into fewer Tl lines of up to 24 voice channels each before the transmissions reached the incumbent exchange carrier’s regional switch, Carrier Access’ customers could save the costs of additional, expensive Tl lines. The savings could be substantial for competitive local exchange carriers—the new telecom service providers that arose after the 1996 Telecommunications Act compelled the regional Bell companies to open their infrastructure for use by competitors. Since 1995, Carrier Access had designed its products to concentrate traffic in several steps. The company’s Access Bank Tl multiplexer, for example, digitized up to 24 voice channels and funneled them into one Tl line. The Access Navigator served to concentrate several T1 lines into fewer T1s. Finally, the Wide Bank 28 multiplexor could channel 28 Tl lines into a single T3 line, which could handle 672 voice signals, as the transmission got closer to the service provider’s switch.

The company’s more current products transmitted signals in the widely accepted Time Division Multiplexing (TDM) format. TDM constituted a traditional circuit-switching technology in dedicating a given circuit to a given transmission for the duration of the transmission. This circuit switching technology, however, was soon expected to yield to more efficient “packet switching” methods. Packet switching technology worked by breaking transmissions into chunks called “packets,” transmitting them individually over various circuits, and reassembling the packets in the proper order at the receiving end of the transmission. The packet switching method aimed to enable further concentrations of signals and more efficient use of capacity. Carrier Access had designed its Cactus products to bridge the gap from circuit switching to packet switching. The products would essentially enable carriers to migrate their networks from TDM to transmitting in signals in the packet-switching format known as Asynchronous Transfer Mode (ATM). This would save carriers that still deployed TDM the expense of replacing all their equipment and give them the flexibility of migrating their networks to the ATM format.

The company’s continued upward trajectory was reflected in its 1999 end year financial results. Revenue had increased 126 percent to $108,815,000 from $48,133,000 for 1998. Roger Koenig pronounced 1999 an exceptional year, attributing the strong financial results to several accomplishments, including a 300 percent increase in Wide Bank revenue and the successful introduction of the Access Navigator, which contributed $10 million in revenue. He also stated that the company had added a new research and development facility in Tulsa, Oklahoma, which enabled accelerated product development and that Carrier Access had hired well over 100 new employees in 1999.

The company also continued to introduce new innovations as it headed into the year 2000. In February, Carrier Access announced its new Speedway Installation Kit for its Access Bank and Access Exchange products. The product provided everything a user needed to install up to two Access Bank units or Access Exchange switches. The company unveiled the Navigator Valet, designed to provide a graphic user interface that eased the configuration of system parameters and cross connection mappings. Carrier Access also introduced new capabilities for Adit (formerly known as CACTUS), which were aimed at supporting routing and next-generation softswitch applications, making it easier to add new capabilities and evolve with network infrastructure changes. Finally, in January 2001, the company introduced the Broadmore platform, which improved the use of carrier infrastructures by efficiently converting and packing structured circuits into ATM optical connections.

In June 2000, Carrier Access announced that it was expanding its research and development facilities in Tulsa, Oklahoma by 250 people over the next three years. Approximately 120 people were engaged in research and development at the Boulder headquarters, but the company needed another site near educational institutions with a potential pool of skilled employees. The company chose Tulsa because of its proximity to the University of Oklahoma, Oklahoma State University, and the University of Tulsa, which together had established a center of excellence in telecommunications. At the time of this announcement, the company was ranked as the nation’s 28th fastest growing company in the May 29 issue of Business Week magezine. In just three years, the company’s average sales had grown 165 percent, profits had risen 269 percent, and return on capital had increased 15 percent.

In July, Shri Dodani, the company’s vice-president of engineering, accepted an appointment as president and chief executive officer at telecommunications start-up VxTel. Dodani’s departure came after the promotion of co-founder Nancy Pierce to corporate development officer and Tim Anderson to chief financial officer in May. In her new position, Pierce was to be responsible for strategic planning and ongoing partnership development, in addition to continuing to serve as corporate secretary, treasurer, and director for Carrier Access. Anderson’s new position entailed responsibility for all areas of finance, accounting, SEC compliance, and investor relations.

On August 15, 2000, Carrier Access announced its first acquisition with the purchase of Millennia Systems Inc., a Roanoke, Virginia, company that designed communications equipment, for $13 million in stock and cash. Millennia specialized in designing equipment on a contract basis for communications companies, including Carrier Access. Companies hired Millennia if they needed to market their products quickly but did not have the necessary research and development on site, or if they required additional consulting. Koenig, who had hired the firm in April for a short-term project, saw the firm as a complementary operation to Carrier Access. Millennia employed 20 engineers with considerable talent in optics and Internet protocol, plus the company was located in affordable Roanoke, Virginia, only 50 minutes from Virginia Tech University in Blacksburg, known for their computer and communications engineering programs. Although the firm was not for sale at the time, Koenig persuaded the owners to sell in August. Carrier Access planned to triple the Roanoke staff of 22 within the year and to have Mellennia assume control over the company’s customer service terminal division, which designed communications equipment located at customer sites. Following the Millennia acquisition, Carrier Access announced in October that it was also acquiring the ATM product line of Litton Network Access Systems of Roanoke, Virginia, after Litton announced that it was going out of business. Roger Koenig believed that the addition of the Litton products together with the additional engineering and technical talent posed a natural fit with the company’s acquisition of Millennia Systems. The company planned to move the new product lines into its new Carrier Access Millennia Technology Center in Roanoke by the end of 2000.

In October, Carrier Access was listed as 7th in Forbes magazine’s 200 Best Companies in America and was named the fastest growing Boulder County firm in the Colorado Technology Fast 50 and third fastest growing statewide. The company had added about 200 employees in 2000 and was planning on moving into additional space in Boulder.

The Telecom Bust: The Company Stumbles

Despite these accolades, however, Carrier Access began to falter. October proved to be a tumultuous month for the company, filled with heady recognition and analyst downgrades. The company warned that its profits would not meet expectations, as sales to communications companies had slipped. As a result, the company’s stock dropped from more than $20 to about $14. The company’s stock had been earlier trading as high as $60 per share in July, but had tumbled as part of the downturn in the greater telecom market. The company’s stock lost another 31.94 percent in value upon announcing lower than expected operating results for the fourth quarter ended December 31, 2000. Although net revenue rose to $148,050,000, compared to $108,815,000 for 1999, revenue growth for the fourth quarter of 2000 had decreased to $25,014,000 from $33,112,000 for the fourth quarter of 1999.

Nevertheless, despite the company’s setbacks and the general downturn in the telecom market, the company announced on February 13, 2001 that it was opening an office in Camarillo, California to augment and accelerate its focus on wireless and packet voice infrastructure product development. Roger Koenig stated that the wireless explosion of the past few years had created a large demand for broadband products that provide high bandwidth, increased density, and decreased costs throughout the network. He sought to position the company to produce new capabilities for this market. The Camarillo office was part of the company’s ongoing strategy to expand into these target growth areas.

As late as May 2001, Koenig continued to give an upbeat assessment of the company’s growth prospects for the near and long term, in spite of the increasing harsh environment in the telecom industry. He believed that the company’s main clients, including such customers as Level-3 Communications and Quest Communications, would need to continue investing in access equipment to connect customers to their services. Despite its stock slipping to $8 per share, Koenig believed the company was poised to assist the major service carriers to increase their revenue growth by improving the quality of their services. The investment firm Credit Suisse First Boston estimated that in 2001 $75 billion would be spent on connecting customers to the networks created within the last five years. Carrier Access believed its major opportunity lay in expanding its position by providing this access. Although Carrier Access had recorded a first quarter net loss of $850,000 in 2001 compared to earnings of $7.5 million a year earlier, the company was optimistic that the business environment remained good. The company continued to hire new employees and to invest heavily in research and development, amounting to $15.1 million in 2001—a 111 percent jump from 1999.

Nevertheless, by July 2001 the company began to experience the effects of the telecommunications downturn. The telecommunications equipment sector had fallen on difficult times. In June, for example, Nortel Networks announced that it would lose $19.2 billion in the second quarter alone as demand plummeted for its switches and routers. Level 3 Communications had its first ever layoffs of 1,400 workers. The ratings on the bonds of Lucent Technologies had been cut to junk status by Standard & Poors, a sign that Lucent’s survival as an independent company was far from certain. Avaya, another telecom equipment provider, reported that its sales for the rest of the year would fall short of expectations and that it planned to cut 3,000 jobs. Six months previously, demand for the equipment that moves data over telephone lines and across the Internet began a precipitous drop that continued to grow worse. In July, Carrier Access announced that it had to cut 15 percent of its staff, about 80 workers. As with other firms in the telecommunications equipment sector, the harsh economic climate compelled Carrier Access to rein in costs. For the second quarter of 2001, the company reported revenues of $29.4 million, compared with $44.1 million in the same period in the preceding year. In addition, like other telecommunications firms, Carrier Access faced for the first time serious curbs in technology spending. The company also planned to cut other operating expenses by $1 million. As a result of these conditions, the company’s stock lost substantial ground over the year, plummeting from a high of $67 to just $4 per share by July 2001.

Indeed, in the first half of 2001, the telecommunications industry had lost 130,442 jobs, a staggering 19 times the amount in the same period in the previous year. The job cuts in the telecom sector accounted for nearly 17 percent of the economy’s overall loss of jobs of 777,362. The telecommunications industry, now littered with smaller companies in bankruptcy, nevertheless witnessed a relative resurgence of the larger regional companies. Many of the smaller companies that had gone from explosive growth to bankruptcy blamed their plight on the anti-competitive practices of the regional Bell companies, which were said to have blocked new competitors from accessing their phone lines. The Bell companies argued, however, that the telecom debacle stemmed primarily from bad business plans and over-expansion, not anti-competitive practices by the Bell companies.

In the midst of this environment, Carrier Access switched strategies, from serving small telecommunications companies, which were quickly going bankrupt, to the large regional Bell companies, which remained profitable. In the first quarter of 2001, half of the company’s business came from such large incumbent telecoms as Quest and Pacific Bell. As matters stood in the telecommunications industry at the end of 2001, the infrastructure companies had spent billions installing fiber-optic lines. But only 5 percent of the buildings in the United States had been connected to these fiber-optic networks, which appeared to place Carrier Access—especially because its customers included the Bell companies—in an enviable position to provide these “last mile” connections. Nevertheless, because of the telecommunications downturn, capital investment had dried up and some investment analysts anticipated that it would be years before significant growth returned to the sector. Carrier Access, however, remained convinced that customers wanted access to the enormous amount of communications infrastructure already in place. It also saw significant opportunity in entering and introducing products for the wireless market. The company had already begun developing wireless products in 2000, which comprised 6 percent of its total business by the second quarter of 2001. Some of its customers included AT&T Wireless and Verizon.

As a result, the company saw the wireless market as a profitable niche with enormous potential. Rather than lie low during the telecom downturn, Carrier Access decided to pursue the wireless market aggressively. The company employed fully half its workforce in research and development in search of the next innovative product. During the early 2000’s, Carrier Access’ strategy to weather the telecommunication storm thus lay in switching its customer base primarily to the large and profitable incumbent telecoms and entering the wireless market.

Principal Competitors

Adtran, Inc.; Advanced Fibre Communications, Inc.; Cisco Systems, Inc.; CopperCom; General DataCom Industries, Inc.; Lucent Technologies, Inc.; NEC USA, Inc.; Northern Telecom Limited (Nortel); Paradyne Corporation; Polycom; VINA Technologies.