But with the U.S. economy in the doldrums and many of the upstarts now in financial trouble, carriers aren't spending nearly as much as Roth expected on Nortel's St. Laurent-built equipment, analysts say. In fact, Nortel's customers now find themselves with too much network capacity. That could translate into layoffs among the highly skilled production workers in St. Laurent, he added. But with Nortel and analysts betting on a resurgence in demand for optical equipment, the company might decide to spare the plant in order to have it ready for a pickup in demand. On the whole, there's a slowdown in optical spending, but that doesn't mean it isn't going to resume or that there isn't going to be hot competition in some segments of it.
Nobody thinks the optical is in for a five-year slump.
Optical is going to come back fairly quickly. In the meantime, Grant expects more Nortel job-cut announcements in the coming months. The next round will be much more focused.