Cisco and Nortel predict a year of struggle
By Paul Abrahams in San Francisco
Published: September 8 2001 00:51 | Last Updated: September 8 2001 01:20
Cisco and Nortel, two of the largest companies in the networking sector, on Friday warned that demand for their equipment from the telecommunications sector remained dire, and this was likely to continue for between a year and 18 months.
John Roth, Nortel's chief executive, said the Canadian telecoms equipment group would experience another year of poor sales, and that there was no way to say when spending by telecoms companies would pick up.
The challenge was to cut the company to a size at which it could break even. The "resizing" of the company was running ahead of schedule, he added.
The group reported a loss of $19.2bn in the second quarter and has cut about 30,000 jobs this year.
Mr Roth dismissed merger speculation, saying the group was "not open to combining companies".
His comment followed a report by RBC Dominion, the brokers, that Nortel would be bought by Cisco.
Nonetheless, Bill Nuti, Cisco's senior vice-president of provider sales, said he expected wide-scale rationalisation among telecoms equipment makers.
Speaking in New York, he said the group could face another six "very challenging" quarters. Cisco's shares fell 0.3 per cent to $14.36, compared with a 52-week high of $68.
Nortel's shares closed up 3.1 per cent at $5.53. It has a market capitalisation of just $18.1bn, down 92 per cent in the past year.
Mr Roth admitted that years of rapid expansion had robbed his company of discipline and focus. "It is going to be a while before the world injects $700bn into my customers again," he said. |
