Rumours began spreading late last week that Nortel Networks Corp. and Motorola Inc. could be in talks to merge their respective wireless equipment units following a report of such a move in a Business Week article. Some observers are speculating that may be the case since there has been significantly lower demand from carriers for wireless infrastructure equipment.
An RBC Capital Markets report also indicates that Nortel may have to initiate another round of layoffs if it wants to reach profitability before the end of 2003. Analyst John Wilson said in a report: "Lowering the break-even level sufficiently to reach profitability again prior to the end of 2003 will, in our view, require an additional 10%-20% reduction in head count." That could translate into a further reduction of 5,000 to 10,000 employees.
Speculation of more consolidation within the industry has been a hot topic recently. Following a significant decrease in carrier spending, some believe that the large equipment makers, such as Nortel, Motorola and Lucent Technologies could unload those business units or merge them with another company. More details.
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