Wednesday, August 28, 2013

Seeking Alpha: Cyan Looks To Bring The Green

Talking about increasing carrier network traffic may border on the cliché at this point, but it's a real problem for network operators. If Cisco's (CSCO) prior estimates of compound annual traffic growth of 23% between 2012 and 2017 are even close to accurate, carriers badly need new strategies for coping with traffic growth, as boosting capex by 23% a year for five years isn't much of an option.

This is where Cyan (CYNI) comes into the picture. Cyan is unproven (less than $100 million in revenue), but the company has two separate approaches to help carriers meet their network needs - packet-optical transport systems that can help manage traffic at the metro edge and reduce the need for expensive routers, and a purpose-built SDN solution for carriers that offers the promise of more efficient network utilization.

Cyan is going up against numerous well-established equipment vendors and alternative approaches to managing network traffic. What's more, I have some concerns that the company's position in carrier SDN isn't as unique as hoped. Even so, I believe there is an argument to be made that Cyan shares are trading meaningfully below fair value. While this is a company/stock with above-average risks, a fair value in the range of $12.00 seems reasonable and that range could expand well into the high teens.

Please read the full Seeking Alpha article here:
Cyan Looks To Bring The Green

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