Thu, Dec 27, 2001 page21

• Makers of Internet equipment go global

  WIRING THE WORLD For many Silicon Valley firms, demand from across the Pacific or the Atlantic has brought in much-needed revenue after the boom in the US went bust

  • NY TIMES NEWS SERVICE
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  Hammered by the recession at home, US makers of computer networking equipment have increasingly relied on wiring the rest of the world to bolster their sales.

  Overseas sales of Internet equipment grew for many companies this year, even as domestic revenue shriveled. Much of the growth came from Europe and Asia, which didn't experience the same network-building rush the US saw in the late 1990s.

  "They didn't have the boom, they didn't have the bust," said Stephane Teral, director of global optical networking for the San Francisco research firm RHK Inc. "They've had much more steady, growing spending."

  In addition, governments in many of those countries have made the construction of computer networks a high priority. The US government has left that effort to the private sector, causing some in the technology industry to warn that other countries may seize the lead.

  Cisco Systems Chief Executive Officer John Chambers, for example, wants federal authorities to craft some kind of plan for bringing broadband Internet service to more homes. The US is the only member of the G-7 group of industrialized countries that has no such policy or isn't drafting one, he said.

  "Accelerating broadband deployment across the United States is one of the drivers in improving our standard of living, productivity and economic growth," Chambers said. "The United States has moved from a leadership position in broadband deployment to one of the few major nations that do not have a national program to accelerate broadband."

  While the relative health of overseas sales has helped ease the pain of this recession for networkers, it hasn't been strong enough to make up for all the revenue lost at home.

  For example, spending on optical network equipment -- which transports information on beams of light -- fell from roughly US$19.6 billion in North America last year to $11.2 billion so far this year, according to RHK. At the same time, sales in the Asia-Pacific region grew from US$4 billion to US$5.5 billion and Europe grew from US$6.9 billion to US$8 billion.

  Such growth rates aren't spectacular, but they have buoyed balance sheets for many Silicon Valley firms.

  For example, 3Com Corp of Santa Clara, California, said last week that its second-quarter sales in the Americas had fallen US$47.9 million from the first quarter. However, its sales rose US$40.9 million in Europe and US$11.2 million in Asia during the same period.

  For Extreme Networks, Asia accounts for about 45 percent of revenue, compared with 20 percent a year ago. Gordon Stitt, the Santa Clara company's president and chief executive officer, spent a week in China last month. The national and local government officials he met, including the mayor of Beijing, seemed determined to wire the country, he said.

  Many industry analysts expect China to continue growing in importance to the networking industry. The country is vast, densely populated and still needs the basic network backbone equipment already in place in the US.

  Even if sales there slow or soften, this year has demonstrated to many in the networking world the value of selling their gear in many countries with their own business cycles and policies.

  "Whether it's a boom cycle or a bust cycle, it's just a temporary cycle," Stitt said. "Globalization isn't a cycle."
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