Sycamore Surges on Government Win

Though the final announcements have yet to be made, early reports suggest that gearmakers Ciena (CIEN), Sycamore (SCMR), Juniper (JNPR) and Cisco (CSCO) are the big winners in the government's big networking contract.

People familiar with the Defense Department's Global Information Grid Bandwidth Expansion project, affectionately known as GIG BE, confirmed a report Friday by industry news site Lightreading.com that the four primary suppliers to the network construction plan have been notified.

While outfits like Ciena and Cisco were seen as favorites in the bakeoff, Juniper and Sycamore had longer odds. Shares of both companies jumped Friday as word reached Wall Street.

Sycamore shares jumped 91 cents, or 21%, to $5.04 in midday trading, while Juniper shares, which had been up as much as 4%, settled back down to yesterday's closing price of $16.79. A big loser in the top honor race was optical equipment maker Corvis (CORV), which had been seen as a potential surprise candidate by some investors. Corvis shares fell 26% when it became apparent that it lost its bid as a primary supplier.

Reps at Ciena, Cisco and Corvis weren't immediately available for comment. Sycamore declined to comment, and a Juniper spokeswoman said the company is "involved with the process" and expects to hear a final decision by yearend. Officials at the Defense Information Systems Agency said contracts haven't been awarded and that they haven't released the names of the vendors.

Even a few of the winners disappointed investors. Ciena was thought to be a lock for the optical switching business, given the popularity of its CoreDirector product. That job went to Sycamore, a tech shop that nearly faded into oblivion as the telecom industry collapsed and phone companies stopped buying futuristic optical systems.

Similarly, some analysts and industry observers had declared their extreme optimism that Cisco would walk away with nearly all the Defense Department's Internet router honors. In fact, a recent surge in government work helped Cisco avoid what would otherwise been a deeply disappointing quarterly financial report last month.

Cisco shares fell 28 cents, or 1%, to $20.43 Friday afternoon as investors found it mildly disappointing that the computer networking king may have failed to get the core router component of the federal contract. Juniper, which has been taking market share from big rival Cisco in the core router segment, appears to have won that piece of the job. That leaves Cisco to furnish gear for the edge of the network buildout.