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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (48032)	6/17/2001 1:07:46 AM
From: John Trader	Read Replies (1) \| Respond to of 70976

OT-Nortel: Thanks for mentioning that. It almost seems that, according to Nortel, we should just slit our wrists right now and get it over with. I don't know what to make of that company. I also heard when asked about how the U.S business is, they said something to the effect that there have been no orders from the U.S., at all. I could have this wrong, but that is what I recall. An analyst on Friday said that the 19 billion dollar write off essentially wipes out all profit for the company since 1983. That statement is beyond my comprehension. I can't believe the statement that internet traffic is declining. I have heard the doubling every 4-6 month statement from various sources. Besides, they don't provide internet service, they just provide equipment. Apparently, according to Nortel, all their problems are due to something other than Nortel. I think lending money to dotcoms and over stocking inventory was a factor. If one believes that internet traffic is increasing around the world at a fast pace, then the telecom problems really boil down to financial and inventory issues. If that is the case, the problem should go away in a reasonable amount of time. Let me use the airline industry as an example. If air traffic is growing at a fast pace, but most airlines are broke for some reason, the problem should sort itself out. Certain airlines would go out of business, the shareholders would lose money, well managed airlines could pick up the traffic, fares would go up due to increased demand, and new airlines would be formed due to the advantageous pricing. The airplanes the broke companies own could be sold and reused, but eventually if the rate of growth is there, companies like Boeing would get orders again for new planes. If certain airplane manufacturers are broke, that should not be a problem either, they can go out of business if necessary, as long as there are enough different suppliers of aircraft (in the case of Boeing, they own too much of the market, so that part of the analogy does not work). Perhaps a big part of the issue here is that these telecom companies are sort of like monopolies, I am not sure. If that is the case, then Uncle Sam should bail them out, or break them up. I think the situation is much better than before at least, where I live I can get DSL from at least two different companies, and also cable internet service. There does not seem to be a monopoly problem here. So, it seems to me the whole question should be more about the growth rate of the data traffic, and less about how many years of profit just got wiped out by some almost broke equipment company. Maybe I have this all wrong, but in a free market economy the issue should be demand for bandwidth, not about what kind of dumb moves various companies made with loans and so forth. As the to the question of the increase in data traffic, a Corning manager was recently quoted as saying the demand for bandwidth is expected to increase at a rate of 100% per year, averaged out over the next 15 years. There is obviously a huge disconect here. Maybe this is one of those things like when you send a story around a camp fire and it changes into something else by the time it gets all the way around. What we need is the truth, if there is such as thing in this Wall-Street/Telecom world. I don't think Nortel is bad company or anything, but clearly they made some bad moves. I hope I don't sound frustrated here, I really want to try to understand all this, and your coments are very much appreciated. John