Led by the US, the global telecom industry is undergoing a significant adjustment, said John Roth, president and CEO, Nortel Networks, to the press. After several years of capital expansion exceeding the pace of business performance, the capital markets have significantly reduced the flow of funds to service providers. In response, service providers have made driving return on invested capital their primary focus. Consequently, new capital expenditures are being curtailed as service providers look to drive further efficiencies from the investments they have already made. As a result, we are seeing a very significant reduction in equipment purchases in the second quarter of 2001 compared to the first quarter of 2001 and the second quarter of 2000.
Roth added, In this challenging environment, Nortel Networks continues to execute the plan, which was laid out at the time of the announcement of our first quarter 2001 results, to rapidly align our cost structure to the current business level; to streamline our business around our core growth areas of Metro Optical, Optical Long Haul, Wireless Internet, Core IP/Intelligent Internet and Internet Telephony; and to focus our investments to deliver the key next generation networking solutions. We are making excellent progress on this plan and will continue to take the necessary steps to ensure we have the right solutions and resources to remain well positioned as we come out of this difficult period.
