Nortel Says It Delayed Shipments of Some Fiber-Optic Equipment
Brampton, Ontario, July 7 (Bloomberg) -- Nortel Networks Corp., North America's No. 2 phone-equipment
maker, delayed shipments of some of its most popular fiber-optic products last quarter because of a parts
shortage and problems with software that processes orders.
The delays took place at Nortel's plant in the Montreal suburb of St. Laurent, Quebec. Most were confined
to April and the software glitch was largely resolved by the middle of May, spokesman Jeff Ferry said.
Still, the company is struggling to meet demand for the products. ''Capacity constraints and supply
constraints continue to be an issue for our optical-networking business,'' Ferry said.
The delays were ill-timed. Sales of fiber-optic equipment climbed more than 50 percent in the first
quarter and are rising faster than any Nortel product line. Now, rivals such as Hitachi Ltd. and Fujitsu Ltd.
have similar technology and could use such opportunities to gain market share from Nortel, analysts said.
''If vendor A can't deliver, the business goes to vendor B,'' said Mat Steinberg, a director and industry
analyst at Ryan Hankin Kent Inc., a San Francisco-based market researcher.
Ferry declined to say what impact the shipment slowdown might have on sales and earnings in the second
quarter, which ended a week ago. He also wouldn't name the affected customers.
Baan Software
Some of the computer problems were with software that Nortel is using companywide to manage inventory
and process orders more efficiently. Baan NV, a Dutch company that competes with SAP AG and PeopleSoft
Inc., supplied the program and confirmed that Nortel has had problems with its software.
In addition, parts used in the fiber-optic equipment were difficult to get, Ferry said. Nortel, Lucent
Technologies Inc. and other phone-equipment makers buy such components from suppliers like JDS Uniphase
Corp., which is expanding as demand for its products soars. ''Nortel got a number of very large orders
with very short lead times,'' Steinberg said. ''It's hard to get parts that fast right now.''
Customers for the Nortel equipment, which uses lasers to send information along optical fiber at high
speed, include MCI WorldCom Inc., Qwest Communications International Inc. and Williams Cos. Among the
delayed products were the OC-192 and OC-48 lines, popular with companies that carry large amounts of
phone traffic over long distances.
No. 1 phone-equipment maker Lucent, Alcatel SA and NEC Corp. also make equipment for optical networks,
though none is shipping the faster OC-192 product in large quantities, said RHK's Steinberg. Still, they
could take OC-48 market share from Nortel. |
