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To: Ibexx who wrote (2959)	2/13/2002 5:25:23 PM
From: Brasco One	Respond to of 3350

Global Router Sales Drop in 2001 Wed Feb 13, 5:13 PM ET SAN JOSE, Calif. (Reuters) - Global sales of the core routers that provide the backbone for the Internet and long-haul telecommunications networks fell 4 percent last year and are set to fall further this year, a research company said on Wednesday. That decline in sales to $2.4 billion in 2001 was driven by the economic slowdown, reduced spending by telecommunications carriers and a saturated market for long-distance network gear, San Jose, California-based Infonetics Research said. The slump in sales was a marked contrast to the boom that Cisco Systems Inc. , Juniper Networks Inc. and other makers of core routers -- which direct Internet and communications network traffic -- saw between 1999 and 2000, when worldwide sales jumped 252 percent, the company said. Last year proved more difficult, said Infonetics analyst Kevin Mitchell, noting that global router sales fell 22 percent between the third and fourth quarters. The market is certain to contract further this year as service provider customers such as Qwest Communications International Inc. are expected to cut budgets for network equipment as they work through a glut of inventory, while bankruptcies at McLeodUSA Inc. and Global Crossing Ltd will suppress orders, Mitchell said. Overall capital spending budgets of service providers fell about 20 percent last year from 2000, and are expected to drop between 25 percent and 27 percent this year from 2001, he said. Capital spending concerns are weighing on network gear makers, high-flyers during the tech boom on the late 1990s. Many in recent weeks have said that demand is too uncertain to provide guidance beyond their current quarters. The American Stock Exchange Networking Index <.NWX> is down about 80 percent from its all-time high of 1,401.26 on Sep. 1, 2000. Sales of core routers also will be held back by a shift in spending. Network cores -- the "long haul" long-distance lines and systems -- are built out, but the "edge" of networks where service providers connect to customers will need more proportionally more investment, Mitchell said. Equipment spending for the "edge" market in urban areas, where services such as data storage are managed, is expected to grow as business and consumer demand for broadband access rises and new online applications come to market. Cisco and Juniper, the No. 1 and No. 2 router makers respectively, are increasing their revenues from edge routers as they adapt to the anticipated rise in edge-market demand. "Both are investing heavily in R&D and positioning in edge routers because this market is a rare bright spot for manufacturers as service providers continue to invest in edge routers with hopes of increasing revenues by offering more network-based services to their customers," Infonetics said. Meanwhile, Cisco and Juniper continue to dominate the core router market. Cisco last year captured 72 percent of worldwide core router revenues, and Juniper captured 26 percent, according to Infonetics.