Westell boosts its modem capacity
Andrew Corp. adds to healthy telecom signals
By Jon Van
Tribune staff reporter
Published April 11, 2003
Showing signs of health in the ailing telecom sector, Westell Technologies Inc. said Thursday it has boosted its high-speed modem manufacturing capacity by 45 percent.
Due to increasing consumer demand for high-speed Internet connections, Westell--which provides digital subscriber line modems to major phone carriers--redesigned its products and reconfigured its facility to boost capacity, said Van Cullens, Westell's chief executive.
"Some of our new capacity is contingency," he said. "As we look out we see escalating forecasts for DSL. We want to reassure existing and prospective customers that capacity is no issue for us."
But those factory-floor improvements will not immediately lead to new jobs at the Aurora-based company, Cullens said, because much of the work will be handled through automation. "We can do a lot more with the same staffing," he said.
Still, he added, the expansion may lead to more hiring in the future.
That would run against a trend in an industry where layoffs have been common and are not over. Tellabs Inc., the Naperville telecom equipment maker, said last month it will announce another round of cutbacks soon in an effort to keep capacity in line with demand.
With the telecom sector entering the third year of a deep slump following the tech stock collapse, there are opportunities for a company seeking to expand, Cullens said.
"There is a lot of equipment on the market right now at very attractive prices," he said. "A lot of it was acquired by outsourcers in the late 1990s when they were building capacity to a peak, and now it's up for sale. That means that prices for new equipment are also depressed, and we're out there looking for good deals."
There was another bright spot in the local telecom scene Thursday as Andrew Corp., the Orland Park maker of wireless infrastructure equipment, closed a $828 million deal with Lucent Technologies Inc. to supply radio frequency power amplifiers.
That reconfirmed a previous deal between Lucent and Celiant Corp., which Andrew acquired last year. The contract had been up for renegotiation and in the current climate the fact that it was renewed without a reduction is something of a victory for Andrew.
However, the contract will not add much to the firm's bottom line, said one analyst, because there is not much profit margin in that business these days.
"There's no recovery yet in the wireless infrastructure segment," said Albert Lin, a San Francisco-based analyst with American Technology Research. "To win this business, Andrew had to sacrifice on price. It's not making any money on it, but it's strategic growth because the firm wants to get a critical mass established."
Lin said that Westell's situation right now is more enviable because large telecom carriers like Verizon Communications Inc. and SBC Communication Inc. are moving to roll out DSL now that cable-TV carriers have demonstrated consumer demand for high-speed Internet access.
"The incumbent phone companies are now playing catch-up with cable operators," said Lin. "Their overall capital expenditures may still be low, but they're shifting resources to DSL."
Steven Titch, a Chicago-based online telecom analyst, said that DSL started to escalate late last year in Europe and Asia. While North America is behind the rest of the world, it is also on course to grow DSL, he said.
"The phone companies, always cautious, have seen the demand for broadband demonstrated by cable-TV operators," he said. |
