Nortel Networks has told investors that its revenues will rise by 15% in 2001,
but a sector-by-sector analysis by brokerage house ABN Amro
suggests that 10% is more likely.
PROSPECTS FOR 2001:
TRADITIONAL TELEPHONE EQUIPMENT Selling equipment to phone companies used to be Nortel's strength
But demand for traditional voice switches, the key product in this division, is fading fast.
CORPORATE AND METRO EQUIPMENT This unit, which sells communications gear to corporations and local phone companies,
has been a weak spot for Nortel. Cisco Systems commands 59% of the market for switches
sold to corporations, vs. Nortel's 8%.
The same slowdown that is hitting Cisco will hit causing a sharp drop in revenue growth.
WIRELESS EQUIPMENT Nortel has relentlessly chased the third-generation (3G) wireless market
and has landed some big contracts overseas with BT Cellnet,
Airtel, and others. But telecom players in the U.S. and Europe
will probably slow their spending this year in the face of a profit
crunch and weak consumer demand for 3G services.
OPTICAL EQUIPMENT AND COMPONENTS This has been the growth engine for Nortel. But troubled telecom companies are
slashing their spending, and no improvement is in sight.
2001 2000 EXPECTED EXPECTED REVENUE 2000 2001 SALES GROWTH (in billions) GROWTH (in billions) (decline)
TRADITIONAL $6.5 0.6% $5 (23%) TELEPHONE EQUIPMENT
CORPORATE 10.1 44.9 11.9 18 AND METRO EQUIPMENT
WIRELESS 5.1 31.3 5.9 16 EQUIPMENT
OPTICAL 10.6 138.8 13.1 23 EQUIPMENT & COMPONENTS
TOTAL $30.3* 42% $33.3* 10%
* After eliminating sales between business units of $2 billion in 2000
and $2.6 billion in 2001
Data: ABN Amro, company reports
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