Telecom's Titanic Losers

Walter Mondale. The 1985 New England Patriots. Alexander Hamilton. The Industry Standard.

All famous. All losers.

Now, a good chunk of the telecom industry's biggest names have joined the loser club, thanks to their ability to ooze red ink from every pore during the telecom recession.

Fortune magazine memorializes the failure of said companies in a list of the global firms with the largest corporate losses.

Nortel Networks Corp. (NYSE/Toronto: NT) is 2001's biggest loser, with $27.3 billion in losses for the fiscal year that ended March 31, 2002, according to Fortune. Lucent Technologies Inc. (NYSE: LU) came in two notches below Nortel, with $16.1 billion in losses.

The list was made with data from Fortune's Global 500 for 2002 list, which it published in late July. The 25-company list gives grim reassurance that the telecom sector is leading the world's economic doldrums.

Save Ford Motor Co., State Farm Insurance, and a handful of banks, the list was dominated by telecom equipment vendors, service providers, and other companies with heavy telecom and Internet components, such as AOL Time Warner Inc. (NYSE: AOL).

Table 1: Telecom's Biggest Losers
Global 500 Ranking Company Loss ($M)
263 Nortel Networks 27,302
123 Vodafone 23,133
180 Lucent Technologies 16,198
97 France Telecom 7,415
451 Royal KPN 6,712
16 Nippon Telegraph & Telephone 6,496
98 AOL Time Warner 4,921
207 Alcatel 4,444
244 Qwest Communications 4,010
138 Motorola 3,937
75 Deutsche Telekom 3,093
Source: Fortune magazine

Other equipment vendors among the top 25 money losers include Alcatel SA (NYSE: ALA; Paris: CGEP:PA), with more than $4 billion in red ink, and Motorola, $3.9 billion in the hole.

The top money losing service providers are Vodafone Group plc (NYSE: VOD), France Telecom SA, KPN Telecom, Nippon Telegraph and Telephone Corp., and Deutsche Telekom AG (NYSE: DT). The only U.S. service provider on the loser list is Qwest Communications International Inc. (NYSE: Q), which lost more than $4 billion in 2001 and lost money in 2000 as well.

One company that may yet make the list: WorldCom Inc. (OTC: WCOEQ), which has yet to restate its real 2001 earnings after falsely accounting for at least $7.1 billion in expenses.

In all, the worst performers of the telecom space lost some $107.6 billion in 2001 -- and that's not counting the sundry Japanese conglomerates, such as Hitachi, Fujitsu, and NEC, which have scores of other businesses that aren't related to communications. Put another way, that set of companies lost roughly the combined gross domestic product of Costa Rica, Cuba, and New Zealand.

— Phil Harvey, Senior Editor, Light Reading
Page 1 / 9   >   >>
lowcost 12/4/2012 | 9:55:32 PM
re: Telecom's Titanic Losers
Hi editor,

Just a curious, do you have the data about Global Crossing and AT&T on the carrier's list ??

BobbyMax 12/4/2012 | 9:55:30 PM
re: Telecom's Titanic Losers It would be interesting to examine in detail as to what brought down Lucent and Northern Telecom. The executive of these companies were not paying attention to details. Both companies were victimized by useless companies they acquired. They lost focus. What is surprising that Both Nortel and Lucent acquired many useless companies located in California. None of these companies had products/technologies that Lucent and Nortel needed.

Lucent and Nortel will never recover from the massive losses and huge debt. It is not clear why useless companies were acquired by Nortel and Lucent.
Belzebutt 12/4/2012 | 9:55:29 PM
re: Telecom's Titanic Losers Didn't JDS have a $50 billion loss, eclipsing NT's?
Nomoredemo 12/4/2012 | 9:55:26 PM
re: Telecom's Titanic Losers This week , F.Dunn from Nortel was having its cabinet meeting (with all its president and direct reports) and few more meetings on R&D and marketing to set the upcoming direction. Meeting was in Montreal. Things that im assuming must have been discuss was , do they resize the business one more time ?, do they change the current organization structure? , which projects do they stop in R & D etc.. ? Pretty sensitive stuff that needs to be kept very confidential until it gets release officially so nobody could benefit from the impact positively or negatively
Although no announcement or communique or press release have been issued from that meeting at this time, meeting ended apparently thursday.
On Friday, without any press release or any out of the ordinary bad news NT stocks goes down 5.5%.
My conclusions , somebody in the market knows the outcome of that meeting already, somebody in F Dunn cabinet has open up its mouth, somebody in F Dunn cabinet disagree about the direction and leaks info intentionally.
papabear 12/4/2012 | 9:55:25 PM
re: Telecom's Titanic Losers Loose lips, sinks ships!

Seems that the government has the same thing going on in Washington concerning IRAQ.

In this case it sinks a company's stock. In the government's case it will cost many American soldiers their life.

Either way the press does not care because they just may have the next big scoop.
smok_n_mirz 12/4/2012 | 9:55:23 PM
re: Telecom's Titanic Losers >>What is surprising that Both Nortel and Lucent >>acquired many useless companies located in >>California.

>>It is not clear why useless companies were >>acquired by Nortel and Lucent.

Gee what an astute observation...your keen insight dazzles me....

So which core sector of either company made a profit this last year ??

Go grind your ax elsewhere</snip>
umustbejokin 12/4/2012 | 9:55:22 PM
re: Telecom's Titanic Losers You don't expect accuracy in LR's reporting do you? You've got to remember, it's that journalistic mold thing they've got. Maybe if Nortel sponsored LR they would get better treatment. But right now it's going to be everybody gang up on the big guy. Oh yeah and let's speculate about what came out of the cabinet meeting. Must be bad whatever it is. Surely they wouldn't do the right thing.
lightpimp 12/4/2012 | 9:55:22 PM
re: Telecom's Titanic Losers 1. Acquisition of useless technologies.

2. Overpaid for useless technologies.

3. Overpaid underperforming mangers and executives.

4. Financed equipment to deadbeat CLEC/ISP/ICP carriers that filed for CHP11.

5. Overhired worker bee emoployees to build useless products.

6. Fading circuit-switched business as voice CLECs are rapidly decelerating Class V deployments.

7.Shifted focus into overhyped optical switches that no carrier will ever need to deploy.

8. Burden of debt load still way to high

9. Revenues vs. positive cash flow now equal negative cash flow as debt service continues to build up.

10. Telecom Depression? Who saw it coming. Unprepared just like every other vendor.

Once again. Does one really think that it is "Time To Buy?" Sure, I can have 1K shares of each on the cheap but guess what. Wait until the reverse splits start to snowball. They will have to as the shares prices are unattractive to mutual funds and these levels. Most are unable to purchase new share if the price is under $5.

Hmmm. maybe a 10-for-1 will be on the way here soon. Just like Palm Inc. has done. Things are not looking good for quite sometime folks.

BobbyMax 12/4/2012 | 9:55:21 PM
re: Telecom's Titanic Losers The sufferings in the Telecom Sector were brought up by the Telecom Act of 1996. The greedy investment bankers funded a lot of week and greedy companies in the telecom sector. Theseinvestment bankers had evil designed motivated by their greed. The CEO of these companies looted the companies throgh stock options and other instruments of corruptions. Now the whole country is paying the price. Which foreign country would trust us. The effects of these corruptions would reverate throgh the next four or five decades.

The US Government does not care about the built-in corruption in our system.

About 20 companies of a total of 30 telecom service provider have declared bankruptcy. Their survival is very difficult. These bankrupt companies should declare bankrptcy and allow the remainder to survive.

When these very weak telecom service provider companies appeared on the horizon, many VCs and bankers established thousands of telecom equipment start-ups. There was business or technology merit in establishing these companies, but greed and free supply of money blinded these VCs.

I must say that the traditional and established companies such as Lucent, Nortel, Siemens, Alcatel and Ericson are more than enough to serve our needs.
an opinion 2000 12/4/2012 | 9:55:21 PM
re: Telecom's Titanic Losers Let me shed a little light on what the real issue was. As a competitor to many of the companies that were acquired by Lucent as an example I have some opinions based on fact. Many of the products they acquired were not useless but were in many cases to build out their own offerings. The problem they had was getting the products to market. Which boils down to management. Whenever a competitor was acquired by then I cheered since I knew it was the last I would see of them until it was too late. Cisco on the other hand as much as I hate to say this has their eye on the ball from the top down. Cisco has a process finely tuned to bring the acquisition into the fold and into the market place. And lets be honest that is what counts.
Page 1 / 9   >   >>
Sign In