Nortel (NT) sneezed near the technology house of cards when it warned last night, rattling customers, clients, investors and analysts. Since this company is the largest telecommunications equipment maker in the world, analysts think the already shaky tech world is primed for another round of nasty preannouncements.

That's what happened the last time Nortel warned, back on Feb. 15.


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JDS Uniphase




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came out with warnings soon after. It's like a bad high school relationship -- tech is precariously codependent.

Bear Stearns

analyst Wojtek Uzdelwicz said that the corporate spending weakness over at Nortel would affect Cisco,

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. Meanwhile, competitors like JDS Uniphase and Corning, which compete in the optical component market, will likely face the same tough environment that Nortel does.

Merrill Lynch

analyst Tom Astle took the initiative to cut JDS Uniphase's intermediate-term rating to neutral from accumulate because the visibility is just so bad. Nortel also accounts for 15% of the company's sales.

"We believe that JDSU will be caught in what we have coined the 'optical dead zone' in 2001, which is caused by the slowing of the long-haul optical market before the metro market can grow to a meaningful size," Astle wrote, pointing out that everyday folks who want to use a fiber-optic cable to surf the Web at faster speeds hasn't really picked up enough to offset the slide in long-distance, fiber-optic networking.

Expect the company to undergo some changes to offset the slowdown and drop in demand -- new challenges for a company that first hit the market in 1994.

"JDSU has never had to face a slowdown before. It has always faced a demand curve it couldn't meet. We believe this has changed and the company will have to go through a transition to change its business model and structure," Astle wrote. "It has already begun this transition, for example, by shifting some production offshore. However, transitions are not usually fun for investors, especially when this is done in the backdrop of an economic slowdown."

James Parmalee of

Credit Suisse First Boston

agreed with many of Astle's points in his note to investors this morning and sounded a hopeful note that JDS could overcome adversity by summer. The next quarter is expected to be a real bear, however.

"Our analysis indicates that the June quarter will prove to be JDSU's most challenging and that a gradual recovery will begin during the second half of 2001. However, it is difficult to gauge how poor the short-term environment could become given the current fundamentals for JDSU's customers," he wrote.

Many think that Cisco is also at risk. The company warned in the wake of Nortel's last warning six weeks ago.

Merrill Lynch

told investors that the company's shares could come under more pressure as a result.

Morgan Stanley Dean Witter

analyst Christopher Stix said Cisco's growth margins could be at risk, with international demand the major "X-factor" in the next quarter. That said, Nortel's warning indicates weakness abroad, diminished visibility for Cisco and the staggering amount of fear on Wall Street. "The strength of Cisco System's third-quarter financial numbers are still uncertain," he wrote.

And as you know -- markets don't like uncertainty.