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It had to be expected.

I’d say that this is the first of many. It seems that the suppliers of the telecoms operators are having difficulty keeping up with the demand of their customers at the moment. 2009 was spent reducing headcount and taking defensive actions against falling sales. But since the beginning of the year, with the explosion of the Iphone and other mobile devices requiring investments in new networks, France Telecom, SFR and Bouygues etc are placing increased demands on the Ciscos and Alcatel-Lucents of  this world.

A ’spokesman’ for the supplier claims that this situation is quite normal. It appears that lead-times are around six months, given the number of component suppliers in the supply chain, each with their own second-tier suppliers.

It looks pretty obvious that communication is not of the highest quality in this type of supply chain. If the operators and their suppliers had spent a little more time around a table agreeing on what would be and what would not be possible, and where strategic stocks should be held, and that this had been communicated through and agreed by the sales divisions, the current situation may be a little different. Instead it seems that the operators are ‘exercing pressure’ (we can probably guess in what sort of climate) on the suppliers to limit the damage.

In the case of Alcatel-Lucent, the consequences have been and could be even more dramatic. Worldwide sales figures have been reviewed downwards with a similar impact on the forecasted share price, and the Operations Director left the company on Friday possibly because he’d reduced stocks so much in the context of a cost-cutting initiative that it is going to take months to recover. You can be sure that he probably got a big bonus a few months ago for doing so, so we shouldn’t worry for him too much.

Interestingly enough, it seems that the Chinese operators are not facing the same issues. Either they have vertically integrated, have very flexible local suppliers… or didn’t notice the dip in the economic cycle.

I just wonder who is going to be next.

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