Nortel (NT) And Alcatel-Lucent (ALU): Bad News For Telecom Infrastructure

Investing

Published: August 3, 2007 7:17 am

Nortel (NT) turned in bad numbers. According to The Wall Street Journal "the company said the quarterly net loss was $37 million, or seven cents a share, compared with net income of $342 million, or 79 cents a share, in the second quarter of 2006." And, revenue dropped.

The news for Alcatel-Lucent (ALU), a Nortel competitor, was just as bad. The company’s stock is down almost 20% in the last month.

Telecom companies were supposed to be spending a lot of money on high-speed infrastructure and cell networks. But, that did not show up in Nokia’s (NOK) earnings either. It joint venture with Siemens (SI). According to MarketWatch, NOK said "the JV business underperformed in the quarter and that pricing on some contracts was extremely aggressive."

All of this could spill over to Motorola’s enterprise telecom equipment business as well. With the company’s handset problems, the firm does not need trouble in another big division.

But, the telecom enterprise equipment business is not going well. Either the customer base is delaying capital spending, or price ware are heating up.

None of that is going to get better anytime soon.

Douglas A. McIntyre

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