As the industry whets its appetite on the prospect of third-generation services and all the revenue-generating opportunities wireless Internet access can bring, telecom vendors are watching their stock prices fall faster than an elephant on ice skates.
Only Nokia seems completely immune. Lucent Technologies Inc.’s stock is on the rise this week amid rumors someone may buy the company. Yet, even as Nokia and Alcatel say they’re not interested, it is one of the few positive things to happen to Lucent stock in recent months. Some investors are calling for Motorola CEO Christopher Galvin to resign, while others say the company must spin off some assets.
Nortel has to issue a statement reminding Wall Street its earnings actually are in line with expectations. Things are relatively quiet this week for Ericsson, which the company must view as a blessing since its stock has been hammered numerous times over the last few years.
These very vendors are expected to provide a significant amount of the financial backing wireless carriers need to build out 3G networks. So it stands to reason if vendors find themselves with their backs up against the proverbial financial wall, carriers will be affected. In the paging industry, smaller companies have often noted that if paging giant Motorola sneezed, they caught the cold.
The Financial Services Authority, Britain’s financial regulator, warned banks to be vigilant in managing their exposure to telecom debt because of the massive debt being accumulated to build out 3G networks, according to Reuters.
Meanwhile, in the United States, carriers are bidding substantial sums to get more spectrum as the re-auction of C- and F-block licenses gets under way.
In a nutshell, vendor stocks are down and carriers continue to spend-and the health of one depends on the health of the other.
What’s that sound, you say?
It’s Wall Street screaming that the United States needs a solid spectrum policy.
President-elect George W. Bush plans to focus on reconciliation and rebuilding across party lines. But he should keep in mind that nothing united the American public like a good economy.
A sound spectrum policy alone can’t fix vendor woes. Nothing is that easy. But it can’t hurt.
Carriers need a clear (or at least clearer) view of the future to better make buildout plans. It can’t be easy to bid for spectrum in any auction if you don’t know what is or is not going to be available in a few short years.
If it helps the carriers, it should help the vendors. And the vendors look like they could use a little help.
