CEDAR KNOLLS, N.J.-Reflecting the prevailing mood in the wireless industry, Probe Research has demonstrated that marquee telecom as well as information/Internet Protocol vendors will groan from pain in the near future.
But the research firm singles out Sun Microsystems Inc. as a company with little hope.
“Whatever edge Sun may have had in the late 1980s and well into the 1990s has been dissipated in recent years through relentless pursuit down blind alleys and terminal arrogance,” said Allan Tumolillo, chief operating officer at Probe. He noted that Hewlett-Packard Co. is worth five times Sun’s value, Microsoft worth 27 times and IBM Corp. more than 12 times Sun’s market cap.
“No matter which way one wants to interpret Sun (hardware or software), its future is very precarious,” he remarked.
On the big telecom vendors Alcatel, Ericsson, Lucent and Nortel, Probe said their market values dropped 97.4 percent, while market values for the IT/IP vendors Cisco, Microsoft, Intel Corp. and HP fell 70.1 percent.
Probe, however, does not expect any of the other IT/IP players to poach Sun in takeover bids. Noting past failures of attempts by telecom firms to buy IP companies, it discounts the prospect of a Lucent or Nortel taking over Sun.
The data, according to Tumollilo, shows that a rebound in enterprise spending will benefit the IT vendors more than their telecom counterparts.
“The market has an expectation that when the enterprises do come back, the big beneficiaries will be the above four companies and kindred ones like Oracle and IBM, which add another $182 billion to the IT/IP current market caps,” said Probe in a press release.
He said although wireless carrier spending will remain soft, L.M. Ericsson will enjoy better fortunes without reaching its peak moments of a few years ago.
“This all suggests that the road back for the telecom vendors, even when enterprises begin to spend, will be filled with potholes,” states Tumolillo.
