Optical/IP Networks

Nortel's Roth Feels Bullish

NEW YORK -- Today the stock market appeared to be predicting the imminent collapse of the global economy. Yet there are still pockets of unbridled optimism in the technology markets.

Take John Roth, the CEO of Nortel Networks Corp. (NYSE/Toronto: NT), as an example. Nortel's recent volatility in the marketplace has been well documented (see Nortel's Optical Halloween and Nortel Soothes Analyst Worries). But Roth is turning up, not down, his rosy view of optical networking technology.

"We grew 40 percent this year," said Roth. "We'll grow 30 to 35 percent next year. A lot of people would like to have that problem. Nortel does not have a problem."

Roth and Nortel executives spoke at a press conference held here to discuss Nortel's future, in honor of Nortel's 25th anniversary of being listed on the New York Stock Exchange. On the same day, AT&T announced it had picked Nortel as one of the suppliers for its 3G wireless network.

Roth professed an evergreen enthusiasm for the optical market and said the market turbulence was only a sideshow. "I don't work for the stock market. I work for my customers," he said.

Bandwidth economies will put pressure on IT and telecom managers to recraft their networks in order to save money, said Roth. He predicts the migration from voice networks to data networks, along with the advent of optical storage networks and Gigabit networking technology, will drive more demand for optical networking technology.

"Bandwidth is cheaper than processing. You will see people using bandwidth to eliminate processing nodes. It's a cheaper network and cheaper maintenance. It's inevitable. My rule is: When you see something inevitable, get there first."

Roth said that Nortel was looking to extend its techology lead in the optical networking market by being the first to ship 40-Gbit/s (OC768) technology in the coming year. Nortel gained an edge in the market by being the first to leap to 10-Gbit/s technology, mostly at the expense of competitor Lucent Technologies Inc. (NYSE: LU).

Roth -- as well as two of his fellow executives, Bill Conner, President of e-Business, and Bill Hawe, Nortel's CTO -- took the opportunity to take shots at the competition. Roth said that Lucent's Bell Labs would become a competitor "as soon as Bell Labs Innovations finishes innovating." He also described Cisco Systems Inc. (Nasdaq: CSCO) as a "good router company" that had pursued a "random" strategy in the optical market.

-- R. Scott Raynovich, executive editor, Light Reading http://www.lightreading.com

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