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[qi:011] It’s been a bad day for telecom equipment vendors. Cisco Systems’ (CSCO) Brazilian office was raided by that country’s authorities for undisclosed reasons. Local media is suggesting there are “tax issues,” including a potential tax liability (and penalties) of up to $830 million. (If you are from Brazil, please send us some links and translations.) This is the first time the company has been snared in such a snafu. (via Nikos Theodosopoulos of UBS Research.)
In another other piece of dismal news, Ericsson (ERICY), one of the beneficiaries of the 3G boom, was grounded today. It is going to miss its revenue and earnings estimates, reports the WSJ. Too few carriers, too many equipment makers — this is exactly what I was talking about yesterday. Slower spending by Cingular and other Western mobile operators is behind the slowdown, analysts postulate.
Both in North America and in Western Europe, particularly the UK and Italy, we have situations where operators have late entered into consolidation talks and network sharing talks, and such discussions that typically hold back short-term orders
Given their 3G exposure, it wouldn’t surprise me if Alcatel-Lucent (ALA) adds to the drumbeat of bad news.