Wireless gear makers brace for slowdown
Cell phone service providers worldwide will continue to spend less on new network equipment this year, according to major makers of wireless gear.
The sentiment this week from Nokia, Motorola and Lucent Technologies is another dose of bad news for the cell phone industry, which continues to try to rebound from three years of slipping cell phone sales.
"There are no signs of improvement in the infrastructure market this year," Jorma Ollila, Nokia's chief executive, told investors Thursday. "Operators' investment has decreased to exceptionally low levels."
The handset maker warned that it expects sales to decrease in its current quarter. Ollila predicted a 15 percent drop in cell phone network equipment sales worldwide this year compared with 2002.
Recent second-quarter earnings reports from wireless equipment makers show more ominous signs that carriers continue to slow network expansion plans. Anxiety over severe acute respiratory syndrome (SARS) in Asia also continues to dampen prospects in China, where cell phone operators had expected to expand rapidly this year.
Network equipment sales by Motorola's Global Telecom Solutions segment dropped 17 percent during its second quarter because of what Motorola executives described as a "worldwide reduction in infrastructure spending by wireless operators compared to 2002."
Lucent Chief Financial Officer Frank D-Amelio said this week that "reduced spending in North America" was in part responsible for the company lowering its revenue forecast for the third quarter by 18 percent from the previous quarter. Lucent makes and sells cell phone network base stations, the workhorse of any wireless network.
Representatives for two North American wireless carriers, Sprint PCS and Verizon Wireless, did not immediately respond to calls seeking comment. In general, carriers say they are on time with any network upgrades or expansion plans.