Roth reiterates growth rates for NT
"Nortel to expand in Silicon Valley
BY JENNIFER FILES
Mercury News
Nortel Networks Corp. said Tuesday that it will begin construction next week
on a $200 million expansion to its Santa Clara campus, increasing the number of
workers there from 1,400 to 3,800.
The expansion will consolidate operations from about 15 sites around Silicon
Valley, mingling workers who joined the company through a string of recent
acquisitions, including Santa Clara-based Bay Networks Inc., Sunnyvale-based
Xros and San Jose-based Clarify Inc.
Brampton, Ontario-based Nortel, North America's second-largest
telecommunications equipment manufacturer, has spent more than $20 billion
since 1998 to buy Silicon Valley start-ups to expand its reach on the Internet.
``What we're really putting together here in Silicon Valley is what we're going
to run over the Internet. The goal is to bring you close together,'' said Nortel
Chief Executive Officer John Roth in a speech to employees Tuesday.
The company recently changed the main focus of its Santa Clara operations
from volume manufacturing to new-product development.
The expansion will add two more buildings to the campus on Great America
Parkway near Highway 101, with the first scheduled to be finished by the end
of 2001 and the second three months later.
Roth said the campus will serve as a working illustration of the high-speed
data capacity Nortel offers its customers, with a fiber-optic network connecting
five buildings to a single collection of computer servers -- saving the company
$12 million in costs of operating a more scattered network.
Bringing fiber-optic capacity into big-city buildings is one of Nortel's primary
focuses.
The company, a leader in the fast-growing optical networking market, is racing
against Lucent Technologies Inc., the continent's largest telecom
manufacturer, and Cisco Systems Inc., the dominant Internet architect, to build
high-performance networks for data traffic.
Nortel's stock price has fallen sharply in recent weeks, partly because of
concerns that telecommunications service providers may buy less equipment
during the last few months of 2000. Tuesday, Nortel stock fell $4.38 to $64,
down from a recent high of $87 in late July.
In an interview after his speech Tuesday, Roth said diminished demand won't
be a problem for Nortel. He continues to predict that Nortel's 2000 revenue will
grow by 40 percent or more, followed by growth of 30 percent to 35 percent
during 2001.
``We're sold out. I can't make everything I have orders for. Even if we saw
some pullback, we'd have to pull back a long, long way to get to the point
where I'm not sold out,'' Roth said.
Service providers sometimes do threaten to cut back on purchasing during the
fourth quarter, he said, but the phone companies are so hungry for faster
networks that Nortel is increasing its manufacturing capacity. ``Demand in the
marketplace is so high that you either serve it or watch someone else serve it.
In many ways companies are not in control over their budgets if they wish to
stay in business.''
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