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Worst may be over, Lucent CEO says

Worst may be over, Lucent CEO says

After watching the bottom fall out of the global telecommunication equipment market in 2001 and 2002, Lucent Technologies feels like it's standing on more solid ground these days. But the company's chief executive warned there are few signs that a full recovery is on the way.

"Last year, capital expenditure spending declined 48 per cent," Lucent's chairman and CEO, Patricia Russo, said referring to fixed-line capital spending in North America. "When you are experiencing declines at that level in those timeframes, that's pretty dramatic."

As dramatic as the impact of those declines has been on Lucent, which does two-thirds of its business in North America, Russo said the rate of decline had slowed and this might hint that the worst was over for telecommunication equipment makers.

"You get to a point where service providers must spend on maintaining their networks," Russo said.

Relatively strong demand in China and India had also helped shore up business, she said.

However, that did not mean that a full recovery was in the works for equipment vendors.

Russo expected to see fixed-line capital expenditure in North America drop by a further 10 per cent to 15 per cent during 2003 and noted that some analysts had predicted that some sort of recovery might take place in 2004.

However, Russo stopped short of backing those predictions.

"You begin to feel that things are stabilising but not yet recovering," Russo said. "That's why I've been reluctant, and everybody's been reluctant, to call a bottom to the industry yet."

Adding to the uncertainty were ongoing economic and geopolitical issues that threatened to postpone any recovery in service provider spending on new telecommunication equipment, she said. "There's just a lot of overhang right now," she said.

While the market might face a significant amount of uncertainty over the next twelve months or so, Russo was confident that better times lay ahead for equipment makers. "We believe the market for telecommunication equipment will ultimately recover," she said.


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