The main worry in the market is not for Lucent, who should be able to absorb the loss, but for similar small firms owing money to Lucent.
Vendor financing is a credit concern for all the telecom equipment providers, but it’s clearly a larger concern at Lucent because the amount is greater and their financial strain is larger, said Bob Ray, an analyst at Moody’s Investors Service. It’s one of the key factors we are looking at.
We are clearly saddened by this development, a spokesperson for Lucent said to the press. In the last week-and-a-half we have provided Winstar with several extensions for making the payments.
Lucent was the most aggressive of a group of equipment suppliers, including Nortel and Motorola, that courted start-up telecommunications companies with attractive financing in order to win a share of the growing business.
It is well know that Lucent’s portfolio of investments favors the less stable companies, and it is aware of the dangers, In a portfolio of primarily high risk emerging carriers, you have to expect that there will be some losses, particularly as we get into a weaker environment, Mr Ray said.
