Optical Bait and Switch? Missed Product Cycle Costs Nortel Dearly

Having missed out on a key product shift, mighty Nortel Networks (NT Quote) is now stuck pushing air conditioners during the telecom industry's long, hard winter, observers say.

As shortfall warnings from Nortel and its suppliers JDS Uniphase (JDSU Quote) and Corning (GLW Quote) punished the networking sector Friday, some signs pointed to a dramatic shift in optical networking product demand as the culprit. Nortel's failure to heed this shift could leave it in the same straits as rival Lucent Technologies (LU Quote), which missed an earlier product cycle, ceding key ground to Nortel and leading the equipment maker into its current morass.

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