Long term, the networking companies will recover and get beyond this, but in the next two or three quarters, they will see an impact. These now gun-shy networking companies like Lucent, Cisco, and Nortel will see reduced sales because they are loaning less to carriers that otherwise can't afford to buy new equipment. And bankrupt service providers will resell their networking equipment for cut-rate prices. Some carriers can buy used products that are just as good and significantly cheaper. The used equipment will have a lingering affect for a couple of quarters at a minimum.
Bills pile up Networking companies are feeling the pain brought on by their struggling customers.
And earlier this week, Cisco said Convergent Communications defaulted on its loan. The number of struggling emerging carriers continues to grow. Internet service provider PSINet last week said it is running out of money and may file for bankruptcy. Cisco, Nortel and Lucent representatives say the companies have strong guidelines established to approve loans to customers. Most analysts believe Lucent is more at risk from bad loans than Nortel and Cisco, both now and in the near future.