Broadband equipment maker Calix is rallying on its first post-IPO earnings release, after it announced that revenue increased 50%.

The company announced revenue for the second quarter of 2010 of $71.7 million, an increase of 50% from revenue reported for the second quarter of 2009 of $47.8 million. It also booked a GAAP net loss of $3.2 million, or pro forma $(0.09) per share, compared to a GAAP net loss of $8.8 million, or pro forma $(0.33) per share, reported for the second quarter of 2009.

In the pre-market, the stock was bid at around $11.75, which would be a 10% gain over yesterday's closing price of $10.80.

[Editor's update: Though the stock initially rallied, it later sold off on the conference call when the company issued weaker-than-expected guidance. Read our update here.]

Calix President and CEO said the results were due to gains in braodband sales and that the results represent gaining "momentum."

Calix is the beneficiary of several trends, among them the demand for broadband access brought about by mobile and the expansion of Web and video applicatoins, as well as a boost to the rural broadband market brought about by the broadband stimulus package from the government.

 

I recently penned a column for Light Reading on the arrival of 4G and what it will mean for the large global service providers. I think this is a watershed moment for the telecommunications industry and not many folks seem to be paying attention to it.

The business models of the major service providers are about to change radically -- as they go from a heavily regulated, profitable, "utility" model of landline-phone service to the Wild West of the mobile Web. in the pre-4G world, the bulk of their revenue came from predictable and profitable voice services. In the post 4G-world, they will have to provide larger amounts of commoditized data at a lower price point. The bottom line is that 4G is expensive and their margins on mobile data are much lower than voice.

Not only that, but data traffic will predominate the traffic and revenue on 4G networks. When 4G networks get rolled out in 2011-2012, the delivery of mobile data will increase by an order of magnitude. This will present challenges to them on the cost front.

Here are a few facts you might want to follow:

• The global mobile data revenues reached $220 billion and mobile data now contributes 26 percent of the overall global mobile service revenues, according to Chetan Sharma Consulting.
• 2009 also marked the year when the global data traffic (monthly) exceeded the global voice traffic. In the US, the yearly mobile data traffic exceeded the voice traffic for the first time.
• It is expected that 2009 marked the year that mobile data traffic reached a new milestone of 1 exabyte (EB) or 1 million terabytes (TB). By 2016-17, the global yearly mobile data traffic is likely to exceed 1 zettabyte (ZB) or 1,000 exabytes, according to Chetan Sharma Consulting.
• Over 50 percent of the world's households carry a mobile device, according to Accel Partners.

You can read the article in its entirety here.

The Rayno Report recently completed "The Data Deluge: A Mobile Revolution," which details enormous changes that will becoming to telecom networks over the next few years.

The explosion of smartphones over the next 2-3 years is likely to put enormous burdens on telecommunicaitons networks, and it's going to force telecom companies to do a lot of upgrading of their equipment and technology, especially the area of the network known as the "mobile backhaul" portion which links cell sites to the core of the network.

This and forthcoming sponsored research papers will be available, free of charge to registered users, in our reseach store, which is here. Our first report is sponsored by Adtran. I am happy to announce that Adtran will be sponsoring this site for the next few months (hopefully longer), and that they have sponsored some research which the Rayno Report has conducted on their behalf.

The reason that the shift from mobile voice to mobile data will have such a huge impact on the industry is that it was orginally architected to handle voice calls, and the move to 4G represents a historic shift. This will create many problems and challenges for the telecom industry. As you can see below they make a lot more money from voice.

Here's just an example of the growth we expect to see in new data-rich mobile applications: the number of mobile phones has grown 460 percent in just seven years. As these types of growth rates extend into the 4G "smartphone market" -- which will accelerate in the next two years -- you will see data on the telecom networks increase by an order of magnitude.

Consider this:

* A 4G network will accomodate data speeds up to 150 Mbit/s. Considering that most 3G networks provide data rates under 10 Mbit/s, this will be a huge jump in data. This will result in an explosion of new data-rich applications and user demand, which will flood the networks with more data.

* New smartphones applications are already blossoming, with billions being downloaded every month. This is shifting the user demand from voice to data. Telecommunications networks will need to accomodate this new demand for data.

* Smartphones currently have under 20% market-share of the mobile phone market. That will probably expand to more than 50% in the next three years, creating even more demand for data networks.

To read more, check out our free sponsored research paper.

 

I have a Labrador  as a pet. They are famous for eating everything.  So are mobile consumers, which brings an interesting question: With a flood of mobile "tablet computing" devices such as Apple's iPad coming, are the wireless networks ready for mobile consumers, the Labradors of data? The short answer is, "No." The problem is that tablet computers and all of their bandwidth-heavy network-based applications are a little too innovative for the 3G networks they will be running on. Really, they need 4G, which isn't really widely available yet, unless you are in a Sprint/Clearwire WiMax zone.

LAS VEGAS -- All of the exciting new devices and discussion about high-bandwidth 4G (Fourth Generation) data services (up to 100Mbps) here at CTIA have the comm equipment guys salivating: It's likely to mean a boom in new business for building backhaul networks, the plumbing that carriers need to haul all of the data to and from the mobile towers. There are deals to be had, as Alcatel-Lucent announced a new deal with Verizon for backhaul networks paving the way for 4G. In addition, equipment vendors were announcing new gear that can accommodate service providers that need to overhaul their networks for mobile upgrades. For example, Huntsville, Alabama-based Adtran yesterday announced a flexible new Ethernet mobile backhaul product, the NetVanta(R) 8044M,  that can easily swap between copper and fiber.

LAS VEGAS -- Service provider Sprint, which has suffered some much-publicized problems following its merger with Nextel, losing customers at an alarming rate, is making a major push towards its 4G/Wimax efforts here at the CTIA wireless show. WiMax is a "4G" or Fourth Generation wireless technology offering bandwidth up to 100Mbps. It's considered a rival to forthcoming LTE (Long Term Evolution) technology being pursued by Sprint rivals AT&T (T) and Verizon (VZ), but Sprint and Clearwire have been aggressive in marketing WiMax ahead of the pack, making it a huge and risky bet numbering in the billions of dollars. Today Sprint announced its bringing more WiMAX cities online 2010, adding Cincinnati, Cleveland, Los Angeles, Miami, Pittsburgh, Salt Lake City and St. Louis to their list of 4G locations. Today at 1:30 PT Sprint is also expected to announce new 4G device developments. We'll be attending the event and our live blog will follow below... check back in with us at 1:30 PT!

LAS VEGAS -- Who knew? I got something right. About a month ago, I advocated a complex trade involving AT&T. The main premise: The stock was cheap, the dividend was large, and there is a tendency for it to move up into the dividend payment date. So far, so good. AT&T is up about 10% since we looked at the trade. It's still set to pay a dividend that will pay about 6%.  The front-month options tripled into the expiration last Friday. I sold the stock and the options with a collective 20% gain in one month, but I probably pulled the trigger too early. AT&T has exhibited more stength today and likely will rise further on the wireless  hype associated with CTIA. Verizon, coincidentally or not, is also benifitting from the pattern of rising into the next quarter's dividend payment. Verizon is priced a little higher than AT&T, with a P/E of 23 versus AT&T's more modest P/E of 12. Verizon also pays a 6% dividend. The largest North American  service providers such as AT&T and Verizon both pay juicy dividends and will likely get a lot of attention here at CTIA, where every device manufacturer and their cousin will be making announcements about new smart devices on their network. These devices, many of them Android-powered, will be more open and Web-enabled than ever before. And they will be data-hungry. In its last earnings release, AT&T announced that growth in wireless data services and applications grew 26%, indicating that this is where the growth lies. I think more complex and data-hungry devices will only help this trend. AT&T announced today that it's adding new Palm and Dell smartphones to its  lineup. Everybody is also closely watching the 4G service annoucements here at CTIA, which will unleash even more bandwidth for data-hungry services. I think the bottom line is that these trends will be good for the leading service providers, including AT&T and Verizon. AT&T, Verizon, and Sprint are likely to do a lot of sparring here about their next-generation wireless data services. In fact, it's already started. The bottom line? AT&T and Verizon appear to be consolidating their lead, and a wide range of data-hungry smartphones should be good for business.

Chetan Sharma Consulting is out with an report on the mobile apps market, which says that mobile apps downloads are expected to go from 7 billion in 2009 to 50 billion by 2012, growing at a rate of 92% CAGR. Chetan Sharma says this will create a $17.5 billion market by 2012. Chetan Sharma looked at the growth of ondeck (offered on carrier deck), offdeck (outside the carrier), smartphones, featurephones, paid, free, and advertising based (including virtual goods) apps revenue. It calculated the growth in the five major regions: North American, Europe, South America, Asia, the Middle East, and Africa. It then looked at smartphone and subscriber growth, looked at who is downloading mobile apps, and estimated how apps downloads are likley to grow over time. The report says that in 2009, the total number of apps downloads were about 7 billion, with Asia leading growth at 37% of downloads. By 2012, the number of downloads are exptected to growth to 50 billion per year. The main driver of apps growth will be wider adoption of "featurephones" and smartphones. However, Chetan Sharma also observes that the revenue models associated with apps are changing. For example, in 2009, advertising contributed almost 12% to overall apps revenue. This share is expected to more than double by 2012 to almost 28%, according to the report. You can read the whole report here.