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[pic] July 9, 2001 Lousy Sales Forecasts Helped Fuel the Telecom Mess Players Blame Industry Secrecy, miss of Government Data; `Basing Guesses on Guesses By DENNIS K: BERMAN stave Reporter of THE WALL STREET JOURNAL How did the telecommunications industry get it so wrong? As late as last November, Merrill lynch & Co. predicted that domestic equipment purchases by phone and data carriers would grow by 15%, to over $65 billion, in 2001. Now, the brokerage securely believes such purchases will fall 7% this course of instruction. A year ago, Nortel Networks Corp. said it would spend $1.9 billion to boost production and minimal brain damage 9,600 jobs to meet explosive customer collect. Last month, Nortel said it would omit $19 billion this quarter and eliminate 10,000 jobs - on overstep of 20,000 previous cuts. What happened? The blame lies, in part, with the calculations used to predict early sales and inventory levels of telecom gear, and in turn leave into Wall Street earnings guidance. Such counts argon lousy, says Gregory M. Duncan, brain of the telecom practice at consulting firm National stinting Research Associates, and former forecaster at GTE Labs.

Even Nortel captain Executive John Roth in April chided his own companys demand forecasting methods after he chopped 2001 expectations to a heavy(p) loss from a healthy profit. As recently as October of last year, all the conversations I was having with my customers were, `John, you havent shipped me enough equipment yet, when are you going to get the volume up? Mr. Roth said. The people we did not talk to in our customers were the treasurers, who found out in January that they were having bother in raising the money to pay for equipment. Frederick Fromm, president of Oplink communication theory Inc., a Nortel supplier, says his companys forecasts over the last few years were based mainly on informal conversations with customers. Quite openly, our forecast was that demand was... If you want to get a full essay, modulate it on our website: Orderessay

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