When push comes to shove, during a weakened economy, buyers favor established suppliers that have the perception of staying power, if not the reality. Service providers think ahead when making capital improvements, so when it comes time to have their equipment upgraded or replaced, they likely would have more confidence in suppliers they know are going to be around in the long run. Cisco, Ciena, Lucent and Nortel have the upper hand in this battle to survive. Adding insult to injury, Sycamore in large part is beholden to just a few large customers. In fact, two of its largest customers so far have no bookings in the third quarter, hurting Sycamore's bottom line.
Few things paint the competitive landscape better than financials.
Now the company will need to burn through its capital. To conserve cash, the company is restructuring operations and lowering overall costs through consolidation and layoffs. Sycamore's stock has been in a downward spiral since August, closing now in the single digits. Even the industry's big gorilla, Cisco, is dropping to near lows. Raj Srikanth, an analyst with Deutsche Banc Alex Brown, is convinced Sycamore must move forward with the development, production and sale of a full-grooming switch if the company hopes to weather its turbulent economic storm.