TECH TALK By Paul Motter (MF Networx) Maui, HI. (Jan. 7, 1997) --Cascade Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCC)") else Response.Write("(Nasdaq: CSCC)") end if %> took center stage to start out the year announcing its acquisition of privately held Sahara Networks Inc. Eyeing the emerging markets of digital video, voice and other high bandwidth demanding technologies, Sahara enhances Cascade's ability to provide some of the most advanced ATM and frame relay capabilities to the LAN sector. "Cascade's acquisition of Sahara reflects our strategy to extend the reach of backbone switching technology to the edge of the network," said Daniel E. Smith, Cascade's president and chief executive officer. "Sahara's broadband access technology will make it possible for network service providers to efficiently and cost-effectively concentrate voice, video and high-speed data traffic onto public ATM networks. The deployment of Sahara's products at the edge of the network will enable Cascade's carrier customers to shift the traditional demarcation of service provider equipment, increasing the providers' flexibility and extending Quality of Service guarantees." Michael S. Davies, Director of Equity Research at Utendahl Capital Partners, L.P., upgraded Cascade Communications to a "buy" recommendation. ************ 56 Kbps Modem Progress Report The two major players in this battle of incompatible modem technologies kept the presses rolling: U.S. Robotics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USRX)") else Response.Write("(Nasdaq: USRX)") end if %> announced it has now completed beta testing of its x2(TM) technology in 87 area codes and 7 Bell operating company regions. The company plans to make additional announcements of its field testing of the x2 modem technology prior to its official release scheduled for late January. It is also in the process of seeking FCC (Federal Communications Commission) certification of the x2 technology. The company also announced the addition of more than 60 Internet service providers (ISPs), bringing to 100 the number now supporting its x2 technology. The list of ISPs committed to supporting x2 to date represents a total of more than 16 million consumer and business subscribers. "The support we're receiving for x2 technology is overwhelming, and we're pleased that regional and global ISPs and on-line service providers have lined up behind this breakthrough technology," said Ross Manire, senior vice president and general manager of U.S. Robotics' Network Systems Division. "People from all parts of the world will be using x2 technology to download graphics-intensive files and other data at nearly double the current maximum analog modem speed." Data Communicationsawarded U.S. Robotics the highest performance award for its Total Control Enterprise Network Hub. LAN Times also awarded its 1996 Best of LAN Times award to U.S. Robotics for its integrated remote access solution. "This evaluation proves out our internal testing, which has always shown that U.S. Robotics' Total Control customers have a performance advantage," said Michael Santiago, manager of product marketing for U.S. Robotics' Network Systems Division. "It also bears out the testing that our large telcos and Internet service provider customers conduct. Our ability to deliver excellent performance results is a big part of the reason we've been selected as the primary vendor by these customers." Hambrecht & Quist analyst Rakesh Sood said Thursday that U.S. Robotics Corp.'s first quarter earnings view of $0.72 a share "may be in jeopardy," and the company may miss that estimate by a "few pennies a share." "U.S. Robotics may have 'potential shortfall' in revenues for the first quarter ending December 30. We had expected the last couple of weeks to be strong for modem sales. It appears that that might not be the case.... [The] estimate of $0.78 a share for the March quarter might be aggressive. U.S. Robotics may see a benefit from its new x2 high-speed computer modem technology starting in mid-to-late February. The second quarter ending in March will have only a partial benefit from the new technology. U.S. Robotics may have upside potential in the second half of 1997." Rockwell Semiconductor Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ROK)") else Response.Write("(NYSE: ROK)") end if %> announced that it has licensed ARM's RISC microprocessor technology. This will allow Rockwell to incorporate ARM's high-performance, low-power RISC CPU cores into its communications semiconductor systems. This will allow Rockwell to build on the ARM technology to expand into new product areas of wireless platforms, digital infotainment/multimedia, and high-density central site modem systems for their new K56Plus technology. "Rockwell selected ARM's RISC technology because of its industry leading price, performance and power efficiency. Embedded 32-BIT ARM RISC controllers are a key enabler of Rockwell's diversification into new communications areas," said Dwight Decker, president, Rockwell Semiconductor Systems. Their first ARM-based products will be 56Kbps modems for central site equipment. Central site modems are the banks of modems used by ISPs and corporations for remote access. "We are committed to establishing ARM as the processor of choice by teaming with world-class partners. As Rockwell is a leader in mixed-signal processing for personal communications electronics, this partnership will further fuel ARM's ASSP growth," said Robin Saxby, CEO and president of ARM. But the most curious and promising news item concerning the 56 Kbps wars came quietly from CMP Media's EE Timeswhich ran thefollowing story this week: Fast-track Effort Pushes PCM Modem Standard by Loring Wirbel Berkeley Heights, N.J. -- The concept of a pulse-code-modulated modem took significant steps forward in December, due to the work of the Telecommunications Industry Association's TR-30 technical group and to a marketing effort spearheaded by Lucent Technologies Inc. and Rockwell Semiconductor Systems. The "fast-track" group, which will promote a 56-kbit/second asymmetric analog-modem standard before the TIA, plans to meet again in Fort Lauderdale, Fla., the week of Jan. 20. That will be followed by an ad hoc meeting with the International Telecommunications Union's Study Group 14 in Fort Lauderdale the following week. If the groups continue to make progress, there may be few disagreements remaining between the Rockwell-Lucent camp and a separate 56-kbit camp led by US Robotics Inc. (Skokie, Ill.). Though US Robotics has been portrayed as a holdout in the race to gain a standard in PCM modems, both Dale Walsh, vice president of advanced development at US Robotics, and Richard Stuart, vice president of technology, were active participants in the most recent TR-30 meetings in Orlando, Fla. Rockwell, Lucent and US Robotics said early last fall that they were working on technologies to extend the downstream speed of analog modems to 56 kbits/s and beyond. While speeds greater than about 33.6 kbits/s are impossible in traditional bi-directional modems, according to Shannon's law of noise in communications channels, the PCM modem developers use central-office tricks of synchronizing codecs at subscriber ends, which are dependent on the digital termination of lines in the central office. Local-exchange carriers, Internet service providers and OEMs are all excited about PCM modems, but believe that a single standard must emerge quickly if the asymmetric devices are to maintain a market window before digital-subscriber-line modems hit production. (c) Copyright CMP Media 1997 So perhaps all the hullabaloo over the incompatibility between the U.S. Robotics and Rockwell camps will be resolved without jeopardizing the expected short shelf life of the 56 Kbps level of connectivity. Wary and confused consumers could easily damage the bottom lines of these companies should they opt to wait for ADSL. *************** In the ADSL sector, CS First Boston raised its rating on PairGain Technologies Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PAIR)") else Response.Write("(Nasdaq: PAIR)") end if %> to "buy" from "hold." *************** EE Times also reported this week that "severe Internet congestion and slowdowns may be a result of inherent flaws in the backbone of the Net --network routers manufactured byCisco Systems, the dominant router manufacturer." According to a federally-funded networking research report conducted by the Routing Arbiter Project uncovered by EE Times' Internet Editor Larry Lange, the router bug is a widespread problem that plagues a majority of the Internet's 3000 plus traffic routing systems. While Cisco officials have acknowledged that it has made a fix available, the newspaper reports that many of the company's customers are slow in implementing it. "This discovery could shed new light on the hows and whys of Internet slowdowns, brownouts, and even shutdowns," said Richard Wallace, Editor-in-Chief of EE Times. "It could be likened to a real-world scenario where over three quarters of U.S. traffic lights were inadvertently -- yet incorrectly, designed, built, and implemented -- all with an inherit malfunctioning mechanism inside." The EE Times story can be found on CMP's TechWire technology news website at http://www.techwire.com. ************ WorldCom <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCOM)") else Response.Write("(Nasdaq: WCOM)") end if %> and MFS Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MFST)") else Response.Write("(Nasdaq: MFST)") end if %> announced the completion of their merger. The combined company will operate under the name WorldCom. Bernard J. Ebbers, president and chief executive officer stated, "This business combination has created one of the world's premier business communications companies, lending a full range of local, long distance, international and Internet-based services. As a result of the merger, we have an exciting opportunity to increase revenue and customer retention by offering this unique combination of services through a combined sales force of nearly 3,000 professionals. In addition, we expect to achieve significant cost savings from reduced line and access costs, as well as the elimination of duplicate capital spending programs." MFS Communications also announced a $100 million deal with Alcatel Telecom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALA)") else Response.Write("(NYSE: ALA)") end if %> to install synchronous optical network (SONET) equipment for MFS's ring networks in Canada and the United States over the next two years. "Alcatel's SONET equipment is helping carriers achieve world-class competitiveness and position themselves for future growth," said Joe Bass, Vice President and General Manager for Alcatel Telecom Lightwave Products. "Alcatel is working with more and more carriers to build SONET ring networks because they offer highly-reliable and survivable services with lower maintenance demands than legacy technologies." ***************** Level One CommunicationsInc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LEVL)") else Response.Write("(Nasdaq: LEVL)") end if %> announced the LXT917 and LXT916 single chip Intelligent Ethernet 10BaseT repeaters with integrated filters and built-in hardware assistance for the CPU intensive Remote MONitoring (RMON) and Simple Network Management Protocol (SNMP). The single chip 10BaseT repeaters provide the industry's highest level of integration according to Level One. This enables low-cost router/hubs to incorporate RMON and SNMP management with minimal software modifications. "Level One is positioning itself to be a key component supplier of next generation solutions for the Internet access market. Some of the fastest growth sectors of the access market are low-end and SOHO routers whose unit growth rate we expect to about double from 1996 to 1997," said Tam Dell'Oro, President of Dell'Oro Group. *************** On the lighter but deadly serious side, RSA Data Securities, a wholly-owned subsidiary of Security Dynamics Technology Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SDTI)") else Response.Write("(Nasdaq: SDTI)") end if %> announced its annual "RSA DES Challenge." RSA invites and challenges mathematicians, hackers and computer experts to crack or decipher encrypted messages. The fun and games are actually a contest to quantify the security offered by the government endorsed DES encryption standard as well as other encryption technologies and keys. The challenge will be launched during the RSA Data Security Conference to be held in San Francisco, Jan. 28-31, with the target ciphertexts for the different contests being simultaneously posted on the company website at http://www.rsa.com/. Full details and complete contest rules as well as example challenges and solutions will be posted on this home page during the first weeks of January. According to RSA, "Many scientists believe that 56-bit keys, such as those offered by the government's DES standard, offer marginal protection against the committed adversary. However, DES is still used for many applications, and the 20-year-old algorithm is proposed to be exportable under the latest incarnation of Clipper. It is the perfect time to demonstrate to the world that better systems are both required and available." Software has already been developed by computer scientists that will allow even novice users to participate and work on the challenge. For more information about the ongoing RSA Factoring Challenge send email to [email protected], and for the latest news and developments send email to [email protected] . *********** In the earnings department, Optical Cable Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OCCF)") else Response.Write("(Nasdaq: OCCF)") end if %> reported results for the fourth quarter ended October 31, 1996. Net sales rose 37.2% to a record $13.8 million versus $10.0 million for the fourth quarter of fiscal 1995. Net income before tax increased 40.6% for the quarter to $4.02 million compared to $2.86 million for the fourth quarter last year. Pro forma net income, after pro forma income taxes, for the fourth quarter of 1996 was $2.52 million or $0.06 per share. Net sales rose 24.2% to $45.2 million for the year ended October 31, 1996 versus $36.4 million for the same period in 1995. Net income before tax increased 46.7% to $12.0 million for 1996 from $8.2 million. Presdient and CEO Robert Kopstein stated, "We are more than very pleased with the results of the fourth quarter. Much of the efforts expended in prior years to develop significant relationships appears to be paying off at an accelerating pace. Even with such a good year now behind us, we are not happy with a status quo attitude and will continue to push even harder in all market segments. Our international customer base, located in over 68 countries, continues to support sales at an increasing pace. The Company continues its efforts to reach a broader customer base throughout the United States and internationally with increased advertising, trade show attendance, and direct sales presence in more states." *************** Adaptec <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADPT)") else Response.Write("(Nasdaq: ADPT)") end if %> will kick offAdaptec's 1997 Developer's Conference to be held at the Santa Clara Convention Center on Monday and Tuesday, January 13th and 14th, with the keynote speaker being none other than James Burke, the master provider of prize-winning PBS documentaries such as "Connections" and "The Day the Universe Changed." "Connections," according to Dee Cravens, Adaptec V.P. for worldwide corporate communications, "is a Burke masterwork and a perfect symbol of Adaptec and this developer's conference. Adaptec provides connections that allow information movement between computers, peripherals, and networks. Mr. Burke beautifully demonstrates how the world's technologies are intimately and intriguingly connected." The Conference will offer 23 separate technical classes and workshops on topics such as CHIM, ASPI, 1394 FireWire, Fibre Channel, and Multitasking. More information on the conference can be obtained by calling 800/998-8283 or by visiting Adaptec's web page at http://www.adaptec.com.

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