I woke this morning to hear GM may face bankruptcy, even though the taxpayers have loaned the company tens of billions of dollars. Later in the day I traveled to Genband where they tell me business is good. I then went to Nortel who is going through a difficult restructuring. I met with the carrier division and the good news is the company is closing deals - post Chapter 11 restructuring announcement. This means there are some very large customers who are still buying from them - in massive numbers by the way.
Nortel tells me that existing customers are more likely to spend than new ones - this makes great sense. They also will have a restructuring plan out this summer and they hope to have the process complete by the end of this year or possibly Q1 of next year. The mood in the room was more upbeat than you might expect but it is obvious this is a tough time for all involved and I didn't ask about customer defections which have increased.
I finished the day at Tektronix where they told me they are doing very well selling wireless test gear. One specific piece of good news is they are selling lots of LTE product to equipment providers and are now getting RFPs from carriers. They say they are winning a lot of business and replacing Agilent equipment. I didn't reach out to Agilent for an opposing viewpoint but I hope to speak with them soon.
In all, the feeling in telecom is one of cautious optimism. This by the way is regardless of sector - with one of the few exceptions being PSTN lines. The backhaul market is doing well because wireless broadband growth has not abated -- you can thank the iPhone, Pandora, Facebook and Youtube for this trend.
Enterprise and SMB customers are looking to save money so they are exploring VoIP and UC solutions to become more productive as well. Many laid off workers are starting new companies and guess what, they require new phone lines. Oh and by the way, they are likely to use more broadband when they are out of work than working.
Again - a feeling of cautious optimism is permeating the communications companies I speak with. This is different from most every other sector of the market from healthcare to autos to insurance to banking. Telecom - so far has been somewhat resistant to the economy. Contracts are certainly taking larger to close but at least they are closing and companies and people are still buying their smartphones, IP PBXs and cloud-based solutions.
The cycle continues to repeat itself... I wake in the morning and listen to terrible news and then I turn to people in the communications space and hear things are good. It reminds me of last weekend when I went to spend some time with a VC friend who is continuing to invest in the markets he focuses on -- healthcare in this case. I said, aren't you worried about the economy going to Hell and he replied, No, I don't watch CNBC.
I hope in a year we can look back and consider this guy a genius.
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