The Black Box

[wahz]

SBSH on SONUS

Part 1

Our Meeting With Mgnt Reaffirmed Our Belief That Sonus' Biz Is Strong, Its IMS
Offering Is Strong And At These Levels, Investors Should Be Buyers Of Its
Stock.

We recently hosted a meeting with clients and Sonus' CEO, CTO and COO, at the
company's headquarters. The meeting was well attended and management's tone
was noticeably upbeat. Management left us with the impression that business is
strong, management's confidence in solid improving results, and they reminded
us that the recent financial statements do not tell the whole story, with good
momentum beneath the surface. While Sonus' most recently announced quarters
have been less than impressive, management, given its ability to see the
company's business both on and off the financial statements, is seeing a very
different and more positive picture. While management refrained from
addressing the current quarter, we think the positive tone of the meeting spoke
of the company having made significant progress. In the meetings we were able
to address several issues at the forefront of investor thinking in regards to
the stock.

* Sonus' Position As The Primary Class-4 Replacement VoIP Equipment Provider To
Cingular Is Secure And Continuing To Grow, According To Mgnt. There has been
a groundswell of concern over Sonus' status at Cingular following the Lucent
IMS contract win at the wireless carrier. Investors have been speculating
that Cingular, due to interoperablity concerns, may decide to cap its
investment in Sonus gear and give all of its IMS/VoIP business to Lucent.
Sonus' management adamtantly stated that its business with Cingular is
strong, and there have been no discussions with, or indications from the
carrier that it is looking to cease purchasing equipment from Sonus.
According to Sonus' management, the idea that interoperability between Sonus'
and Lucent's gear is an issue, is "garbage". Sonus' equipment is in a
completely different portion of the Cingular network than Lucent's. Sonus is
providing class-4, long distanct trunking for the carrier while Lucent's
equipment will be placed on the access side of the network. Additionally,
the very premise of IMS is that it's an open architectural approach to
networking, enabling carriers to leverage best of breed solutions on a
standardized platform. This is, one of IMS' most appealing characteristic
for carriers.