Cisco Gains Have Been Badly Affected by The Disclosure of Prism of The US in China

Leading global network equipment maker Cisco Systems Inc. (NASDAQ: CSCO) is proved to have been badly affected by the disclosure of PRISM of the US in the Chinese mainland.
China Telecom Corp. Ltd. (NYSE: CHA and SEHK: 0728), the biggest fixed-line operator in the market, brought the group purchase of IP-related telecom equipment to an end days ago and US-based Cisco failed to gain any orders from it this time.
Available information shows that Cisco always won a list of orders of high-end core routers from the Chinese telecom giant in the past and for instance, the latter has a total of 163 backbone networks currently, of which over 70 percent are provided by it, with all of the super nodes and most of the ordinary core nodes being controlled by it. China Unicom (NYSE: CHU, SEHK: 0762, and SHSE: 600050), a smaller domestic archrival of China Mobile Ltd. (SEHK: 0941 and NYSE: CHL), the biggest mobile phone operator there, has 169 backbone networks, of which more than 80 percent are provided by it, with all of the super core nodes, international switching nodes, international sink nodes, and interconnection & intercommunication nodes being controlled by it.
Ma Jun, an analyst with Huachuang Securities Co., Ltd., pointed out that it had become a trend for Chinese telecom operators to adopt homegrown equipment after PRISM of the US was disclosed and the disclosure just provided a good opportunity for homegrown Chinese telecom equipment to enter the fields of finance, energy, telecom and so on. In addition to Huawei Technologies Co., Ltd. and ZTE Corp. (SZSE: 000063 and SEHK: 0763), two leading Chinese telecoms equipment and network solution providers, those smaller ones including Fujian Star-Net Communication Co., Ltd. will benefit from this.
Liu Wanli, secretary of the board of Star-Net Communication, said in an interview recently that telecom business contributed not too much to it in the past and the disclosure of PRISM of the US did provide it a good opportunity to step into the domestic telecom market.
Sources said previously that Star-Net would entered into a strategic partnership with Fujian Newland Computer Co., Ltd. (SZSE: 000997) this month and under the partnership, they would cooperate in the fields of education, medical treatment, and government-related business. In detail, the former would take charge of providing switchers and routers while the latter would be responsible for providing servers and storage service. And in line with industry observers, large-sized data platforms jointly built by them would deliver a strong impact on those imported ones.