Fear of spending cutbacks rises as Nortel cuts revenues forecasts
Hopes of Taiwan network-equipment makers continuing to sustain revenues growth on rising sales of networking devices to telecom operators in the near term have been dealt a blow after Nortel Networks, on September 18, cut its revenues forecasts due to the weak economy and cutbacks in spending by telecom companies, according to market watchers in Taiwan.
Nortel's revised downward forecast contrasts with comments recently made by Cisco Systems CEO John Chambers, who said that Cisco will meet its target of 12-17% annual revenues growth over the next few years as network-equipment demand will hold up despite the economic slowdown, according to a Bloomberg report.
Despite the optimistic statement by Chambers, Taiwan makers voiced worries that the ongoing financial crisis in the US could further spread to include other major financial markets and therefore undermine capital spending by telecom operators worldwide.
However, other sources pointed out that the business downturn at Nortel may force the company to release more orders to Taiwan makers in order to help lower its operating costs.
Consequently, two of Nortel's major contract makers in Taiwan – Alpha Networks and Delta Networks – would not be significantly impacted by Nortel's downward revenues forecasts, said sources from the Taiwan network-equipment market.
EMS giant Foxconn Electronics (Hon Hai Precision Industry) is currently the largest contract maker of carrier-grade networking devices for Nortel.
Nortel's revised downward forecast contrasts with comments recently made by Cisco Systems CEO John Chambers, who said that Cisco will meet its target of 12-17% annual revenues growth over the next few years as network-equipment demand will hold up despite the economic slowdown, according to a Bloomberg report.
Despite the optimistic statement by Chambers, Taiwan makers voiced worries that the ongoing financial crisis in the US could further spread to include other major financial markets and therefore undermine capital spending by telecom operators worldwide.
However, other sources pointed out that the business downturn at Nortel may force the company to release more orders to Taiwan makers in order to help lower its operating costs.
Consequently, two of Nortel's major contract makers in Taiwan – Alpha Networks and Delta Networks – would not be significantly impacted by Nortel's downward revenues forecasts, said sources from the Taiwan network-equipment market.
EMS giant Foxconn Electronics (Hon Hai Precision Industry) is currently the largest contract maker of carrier-grade networking devices for Nortel.
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