Don't roll over

Th 96448
Th 96448
Stephen M. Hardy
Editorial Director and
Associate Publisher
stephenh@pennwell.com

Well, let's see: Communications service providers have announced more capital-expenditure cuts. Carriers and vendors in the optical communications space are going belly up, and those manufacturers still in business have laid off all the production personnel they can, so they've begun trimming engineers and management. With budgets tightened and technical resources limited, companies have pared their supplier lists and demanded wider product lines from the vendors who survive the cut. Meanwhile, prognosticators continue to push the magic recovery date farther into the future. Kind of makes it hard to find a reason to get up in the morning, doesn't it?

But before you pull the covers over your head for the next 18 months, consider that in the midst of all this turmoil, there are still things you can do to ensure your company's long-term health. For example, despite the cuts in capital expenditures, U.S. carriers are expected to spend tens of billions of dollars for capital equipment this year. Not all spending will be in the optical domain, and little will be for significant new infrastructure, but that's still a lot of money. Companies with the right product at the right price will still see revenues this year, provided they're willing to work for them.

For many other companies, however, major revenues appear well beyond the horizon. That is particularly true for startups, many of whom have turned down their burn rates so low that they'd barely warm coffee. But in these circumstances as well, hopeful events can happen. As Tom Hausken of Strategies Unlimited wrote in our May issue, this is the year of the design win, the year to lay the foundation for future revenues. Companies are making supply decisions now for the products they hope to release when the market turns; suppliers must get their seats on the bus now if they hope to ride anywhere when capital expenditures pick up.

Similarly, the staff cuts in many firms will open new opportunities for startups to work with the bigger players as well as each other. How do vendors of all stripes meet customer demands for wider product lines when they've cut their staffs? The answer (for those without the cash necessary to buy struggling companies) is to partner with complementary companies. These partnerships can take many forms, whether as OEM agreements or as joint developments. Multisource agreements also will prove a popular way to ensure that customers can find second sources-and that suppliers will land on customers' radar screens.

In short, now is not the time for companies to put their pillows over their heads. If you're not willing to get up and go to work now, you may never get up at all.

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