For telecom equipment makers (Alcatel, Nortel, Lucent?) who have pinned their hopes on China, they would be wise to not ignore opportunities closer to home. A report by Infonetics suggests capital spending in China will decline 3% in 2006, mostly due to a slow down in the wake of massive build-outs. "The capital intensity for Chinese carriers was over 30%, which is an unsustainable ratio," said Kevin Mitchell, a principle analyst with Infonetics. Meanwhile, capex in North America, Europe and Asia Pacific will grow 6% this year to $190 billion with similar growth expected in 2006. Most of the spending gains are focused on investments in next-generation technologies such as packet voice, broadband and metro Ethernet. A telling tale of the economic reality of breaking into new markets is Nortel's $500 million deal with BSNL. In theory, it is supposed to give Nortel a foothold in the fast-growing Indian market. To date, however, it has only given Nortel plenty of pain and red ink as losses have totaled $286 million on sales of $226 million. Even worse, it appears BSNL has an option to buy another $250 million of wireless equipment, which could mean even more losses for Nortel.
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Mark Evansthe blog - examines the world of telecom and technology from a distinctly Canadian perspective.the person - lives in Toronto, CA with his wife and three children, and works as director of community with PlanetEye Inc. 
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Wednesday, November 2
No Blackberries Allowed
by
Mark Evans
on Wed 02 Nov 2005 05:21 PM EST
The B.C. government has a serious Crackberry addiction it's trying to resolve by making it clear the e-mail devices are not welcome during Question Period. Turns out there's way too far thumb-typing and messaging happening when politicians should be paying attention to the proceedings. The situation is so bad that NDP House Leader Mike Farnworth caught a pair of Liberal Cabinet Ministers violating the rules during QP. Blackberries have become all the craze with politicians in recent years as a way to entertain themselves while killing time in the legislature, parliament, Congress and the Senate. If you're stumped about a policy issue, no problem - just Blackberry one of your staffers to send along the information lickety-split. I wonder if RIM co-CEO Jim Balsillie plans to lobby B.C. Premier Gordon Campbell to re-think the Blackberry ban?
Nortel's Q3: Higher Sales
by
Mark Evans
on Wed 02 Nov 2005 08:15 AM EST
Has Nortel's outgoing CEO Bill Owens set the stage for Mike Zafirovski
to become a hero (and become quite wealthy in the process)? Nortel's
third-quarter results show across-the-board strength, highlighted by
strong wireless sales. Could this suggest Nortel is poised for a
rebound now its accounting and financial troubles have mostly been
addressed? Before anyone gets too carried away with a single quarter's
performance, take a deep breath, step back and get a lay of the telecom
landscape. Nortel still has huge challenges ahead, ranging
from unfocused R&D to competition from low-cost suppliers to
outstanding class-action lawsuits
and a $1.275 billion debt refinancing in February.
Zafirovski, who was cleared to become CEO earlier this week after he
agreed to give back a $11.5 million to his former employer, Motorola,
has
already hinted there are more cost reductions on the way. It could be
that Mike Z. will be able to pull off another turnaround story but it
is going to be a huge uphill journey for a company that still has
all kinds challenges/problems. It appears, by the way, that Mike Z. is
already onboard unofficially given he participated in today's analyst
call where he outlined his six priorities, which include a "clear
strategic focus" and "profitable growth". Another thing Mike Z. may
want to focus on is not getting into money-losing contracts just to
penetrate a new market. The $500-million wireless deal Nortel signed
with BSNL has led to losses of nearly $300-million. In hindsight, this
deal could be Bill Owens' biggest strategic mistake, while only time
will tell if the acquisition of PEC and the joint venture in South
Korea work out.
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