Zhone Technologies helps network service providers get into the SLMS zone. The company's all-IP Single Line Multi-Service (SLMS) platform uses existing local-loop infrastructures to deliver broadband services. Telecommunications service providers use SLMS to offer their business and residential subscribers bundled broadband Internet access, local and long-distance voice, and broadcast video services. The company serves some 750 customers worldwide; about 60% of sales come from outside the US.
The US is Zhone's largest market, accounting for nearly 40% of sales; the EMEA region and Latin America contribute about 30% and 25%, respectively. While North American sales grew 5% year-over-year, international sales fell 9% with large drops in the Asia-Pacific and EMEA regions. Latin America was a bright spot internationally with sales growth of more than 30%.
Sales and Marketing
Zhone markets its products worldwide, selling directly and through distributors, resellers, systems integrators, and service providers. Abu Dhabi-based telecom firm Etisalat is the company's largest customer, generating 15% of sales.
Revenue fell about 3% in 2011 to $125 million, primarily due to a decrease in SLMS product sales to international customers. Service revenue increased more than 15%, but that was not enough to offset the weakness in product sales.
Net income also fell, from a loss of $5 million in 2010 to a loss of $12 million in 2011.
Zhone Technologies' strategy for more sales growth is a combination of infrastructure expansion to provide more support for network service providers, development of its SLMS product, and pre- and post-sales support.
SLMS allows telecom companies to easily transition from circuit-based networks to packet-based networks and from copper systems to fiber systems without having to discontinue service.
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Board member C. Richard Kramlich owns about 15% of the company through his affiliation with venture capital firm New Enterprise Associates.