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Wireline Communication Equipment OEMs Face Uncertain Future

The struggle for survival within the wired telecommunications equipment market is far from over, six years after the market peaked following the Internet and Y2k bubble of the late 1990s.

Despite a shakeout that trimmed their ranks over the last five years, the surviving OEMs servicing the sector, including Lucent Technologies Inc. and Nortel Networks Inc., are still battling tremendous market forces that may eventually sweep them away, according to industry sources.

Based on research data from iSuppli Corp., the wired communications market will continue to register single-digit revenue growth rate for at least the next three years even as the rest of the high-tech sector erase the memories of the 2000-2001 sales plunge.

“The wired communication space is going through major revolutionary changes,” said Steve Rago, an analyst at iSuppli (El Segundo, Calif.). “The telecom service providers are reinventing themselves and are in a battle for survival.”

iSuppli estimates the wireline communications equipment market will rise about 3 percent in 2005, to $92.8 billion, from $90.3 billion in the previous year, but well below the $127.6 billion peak in 1999. Between 1999 and 2003, the sector dropped by more than half and has been struggling since to climb up from the abyss.

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