Let's face it -- it's never good news when a business loses a customer. Well, for wireless telecom equipment makers and their shareholders, Cingular Wireless' $41 billion purchase of AT&T Wireless
With Cingular's (a joint venture between SBC Communications
For peddlers of mobile technology, the effects do not make for pleasant reading. The rationale behind the Cingular deal was to create cost-saving "synergies," so capital expenditures will no doubt be cut to the bone to ensure those targets are achieved. Don't forget, Cingular will have to swallow the costs of this week's monstrous cash purchase. Even worse, the merger comes at a time when revenue growth for the industry as a whole is flat, at best, and carriers are focused on cutting costs to boost profits. None of this bodes well for equipment makers.
So, what equipment stocks should investors be watching? Are there any hot spots in this market?
As other industry watchers have pointed out, wireless equipment vendor Ericsson
Still looking? Lucent Technologies
It's hard not to like Nortel Networks
But don't get too carried away with Nortel. The next-generation wireless Internet may or may not turn out to be the financial tsunami. It's still in a pretty early stage, with plenty of unknown variables. And with a P/E of 65 for 2004, Nortel isn't cheap.
Besides, the wireless market is still up for grabs, with Internet giant Cisco Systems
Is Nortel sitting pretty in the upcoming 3G phase for wireless communications? Is it worthy of its hefty P/E? Talk it over with other Fools on the Nortel Networks discussion board. Only on Fool.com.
Motley Fool contributor Ben McClure hails from the Great White North. Believe it or not, he doesn't have a position in any companies mentioned here.