What Nortel's News Means By James J. Cramer 6/15/01 7:32 AM ET

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Oh man, Nortel (NT:NYSE - news - commentary) is really spewing green vomit from its spinning head this morning. I can't believe how fast this company has fallen apart.

This is a company that just a year ago was raising expectations to $12 billion in optical sales. Just a year ago! What a terrible collapse!!!

This one is particularly egregious because it shows me that, of all of the companies in the sector, Nortel had the single most rosy outlook of all. It had the least controls and the most upbeat prognosticators.

What a travesty.

What happens now? Same thing that keeps happening. Nortel gets hit. JDS Uniphase (JDSU:Nasdaq - news - commentary) gets hit. Corning (GLW:NYSE - news - commentary) gets hit. Cisco (CSCO:Nasdaq - news - commentary) gets hit. Lucent (LU:NYSE - news - commentary) drops again.

These things will keep happening until these managements stop deluding themselves and others that this telco tragedy is secular, not inventory-driven. The business simply isn't as big as it was, and will not return to the 1998-99 heyday.

That's what this Nortel announcement is. That's what is happening now.

That's why this sector still can't be invested in.

Random musings: My reason for owning some shares of Cisco is not telco, it is the rest of the business. There is no rest of the business with Lucent and Nortel, hence the total collapse of those companies.

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