Telco giants face hefty hangover after Y2K party

The top eight telecom equipment makers had a boom 2000 turning over $205.7bn, but they face tough times this year.

The savage decline of Lucent has pushed Ericsson into the top slot, measured by turnover, with Nortel hot on its heels, according to a report by Gartner Datquest. But although seven of the eight top companies registered double-digit growth all have issued warnings. Dean Eyers, telecommunications group vice president for Gartner, said: "Whether there is an actual recession or not, there will be a paring back in 2001. "We expect slowing demand for services, reduced and delayed investments in networks and applications; patching rather than overhauling or replacement of enterprise networks and the disappearance of some customers." Matt Hanrahan, analyst at Bloor Research, said: "It's no secret that the networking market is in trouble. And of the makers, Lucent was probably the slowest of the lot." Ericsson, while losing the handset war, has been winning the 3G infrastructure battle - taking 40 per cent of the contracts awarded so far. But this may be a diminishing market as German 3G telcos make plans to share a single network. The company warned that it would have to make large expenditures in R&D to build the 3G networks. All of the top eight companies: Alcatel, Motorola, Siemens, Cisco, Lucent, Nokia, Nortel and Ericsson (in reverse order), have announced restructuring plans, profit warnings, massive job cuts or all three in the last two months.