China's Huawei is already locked out of opportunities in the US, purportedly because of security concerns, and the door seems unlikely to open now that Donald Trump has pulled off the unthinkable and entered the White House.
The real estate billionaire and blonde buffoon (Ed: is that hair combed forward or backward?) of reality-TV fame has pandered to fears that jobs are being lost to China and other low-cost labor markets, promising to tear up the free trade rulebook on becoming president.
But could Trump's improbable victory have an impact on foreign equipment vendors already active in the US market? Both Ericsson AB (Nasdaq: ERIC) and Nokia Corp. (NYSE: NOK) count US service providers among their biggest customers and use China as a manufacturing base.
Moreover, if Trump is serious about imposing tariffs on foreign imports, his policies could hurt manufacturers the world over and not just in China and Mexico, the countries he has publicly attacked.
Ericsson and Nokia certainly look highly exposed to the US market. Ericsson generated about a quarter of its sales in North America in the recent July-to-September quarter, while Nokia made about 30% of its revenues there.
There is already bad blood between Ericsson and Trump, who was reported to have accused the Swedish vendor of bribing Hillary Clinton back in August. New Ericsson CEO Börje Ekholm, who holds US citizenship and lives in the US, went on record as saying he would not be voting for Trump in the run-up to the election.
On the other hand, both companies have large US workforces. Ericsson, for example, employs more than 12,200 people in North America, according to its latest data, or about 11% of its total workforce. They are also generating a growing share of their revenues from the sale of software products, rather than hardware, as networks become increasingly virtualized and software-based.
That could explain why their share prices did not suffer like some others in the wake of today's news. Ericsson closed down about 1% in Sweden, while Nokia was up by the same amount in Helsinki at the end of the day. Bad news for Huawei Technologies Co. Ltd. -- which might have hoped for a loosening of restrictions under a Hillary Clinton administration -- is also good news for its European rivals.
Contrast this with the impact on IT outsourcing specialists from India that cater heavily to US needs. Infosys Technologies Ltd. (Nasdaq: INFY) is trading down about 4% on the New York Stock Exchange, while Tata Consultancy Services Ltd. closed down more than 4% on the National Stock Exchange of India earlier today.
Indeed, while there is a perception that US workers have lost out to Infosys and its ilk, Ericsson and Nokia are unlikely to seem as villainous to the Trump faithful. And a rapidly consolidating equipment market is leaving AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ) and others with a dwindling list of vendor options -- especially as Huawei's name is already missing.
Even so, the complexity of the global supply chain, and Trump's disregard for big business, may prompt a few jitters. Earlier this year, he lashed out at iPhone maker Apple Inc. (Nasdaq: AAPL) for getting components made in China instead of the US. Tariffs on those components would inevitably drive up manufacturing costs and, in all likelihood, the price of iPhones.
That's a worrying prospect for consumers, service providers and network equipment makers, as well -- of course -- as Apple.
But these are pretty worrying times.
— Iain Morris, , News Editor, Light Reading