Nortel puts net switch on hold
Hailed as 'revolutionary'
Ken Warn
Financial Times, with files from Agence France Press
Nortel Networks, the telecommunications equipment maker, is postponing indefinitely the market launch of a large-scale optical switch that it had once hailed as critical for enhancing communication via the Internet.
The company, based in Brampton, Ont., acquired the optical Internet switching technology when it bought the Xros start-up in June, 2000, in a US$3.2-billion all-stock deal.
Xros was one of a string of high-priced purchases made by Nortel in pursuit of the rapidly developing technology the company believed was vital to satisfy an apparently ever-growing demand for Internet bandwidth and speed.
The switch, called the OPTera Connect PX, was hailed by Nortel at the time of the acquisition as a "revolutionary technology."
However, many of Nortel's technology purchases subsequently turned sour for the company, which in June, 2001, took a US$12.3-billion asset write-down amid weakening demand for its products.
The "dramatic changes" in market conditions had forced customers to focus on cutting their capital expenditure and operational costs, said David Chamberlin, a Nortel spokesman, yesterday.
"Nortel Networks believes large-scale stand-alone optical switches are likely to be longer-term market requirements," he added.
Nortel declined to say if the delay would lead to further write-downs.
Meanwhile, Nortel has won a US$500-million contract to supply Cingular Wireless with telecom equipment for its network in Puerto Rico and the U.S. southeast, according to a statement issued by the mobile phone group.
[Harry: This is a big deal. It can mean one of two things. The first is that demand is exceptionally weak for investment in next generation products. So chances of a re-bound for JNPR and SONS products will be exceptional weak.
ALternatively, it can mean the feature set of their product is poor and 18 months behind it competitors. Competitor would be LU, TLAB and TELM on the switching side. LU we have not head much from. TLAB has dropped it 6700 product and is focusing more on metro/edge optical products. Note 6500 and its embodiments are still selling. That leaves TELM as the only product that integrates next generation SONET switching. That probably explains the jump in price today. Note the TELM has only sold product to Q and Cable and Wireless and one other company the slips my mind. ]
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