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Nortel stalls India plans; readies Q1 results

Mon, 04/16/2001 - 8:00pm
Anne Kerven

No pressure, Nortel. As the world apparently awaits its Thursday, first-quarter results, observers are speculating the news won't be positive, given its two earnings warnings and the overall network equipment market.

Nortel Networks also just announced it would hold off on $350 million in Internet projects in India, given the U.S. economy.

Further, observers think the planned early 2002 delivery of its 40Gbps optical systems, expected to help its earnings, might be pushed back because carriers just aren't spending on new technology when old tech is doing just fine for now.

Most long-distance network links already deliver at least 10Gbps, and a slowing economy and cautious spending mean customers may just settle for that speed instead of investing in the new gear, The New York Times reports.

For its part, Nortel apparently plans to forge ahead. The company doesn't comment on rumors and speculation, spokeswoman Ann Fuller told CEDaily, but it does believe the demand for bandwidth is still there.

And optical equipment makers stand by the need to keep producing higher speed products, regardless of whether their carriers customers think it will save them money.

Fuller agrees. The company needs to keep investing in new technology, she says. They fall behind if they don't, something it can't afford to do in today's market.

As to Thursday's anticipated earnings announcements, observers are watching to see how the company went wrong, especially after a warning last month that first-quarter earnings would be cut and an earlier guidance about this year's performance was withdrawn, Reuters reports.

The Indian investment included a software outsourcing project and other investments intended to produce products for the country's growing Internet market. Also put on hold are an R&D lab, slated to open later this year, and a subsequent 100-plus new employees for the lab.

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