Cash Crunch Threatens to Slow Optical Network Buildout

A cash crunch threatens to chill the red-hot optical networking sector.

Williams Communications (WCG Quote), a leading builder of the next-generation telecom networks that accommodate Internet growth, is about $1 billion short of funding for the next leg of its multibillion-dollar network expansion. To cover that shortfall, Williams is taking the unusual step of selling most of its stakes in networking start-ups that count on it as a big customer.

Blinded?

For networkers, a squeeze from two sides.

The squeeze isn't dire for Williams, as the company also could tap credit lines or return to the junk-bond market to raise capital. But the Tulsa, Okla., company's shortfall marks the first sign that money is tightening for the telecom-service providers that invest huge sums to build new networks. Network builders have depended on stock appreciation to fund their past buildouts. But with their stocks well off their highs, a spending pullback looms. Given the huge networking bets investors have made amid runaway demand for this gear, any cutbacks will surely sting networkers' stock even further. ...