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Our consolidated revenues declined 7% in 2003 compared to 2002. There were substantial declines in Wireline Networks and Optical
Networks while Wireless Networks increased 5% and Enterprise Networks increased 7%. The decline was primarily due to the continued
industry adjustment and capital spending restrictions experienced by our service provider customers. As well, the decline in 2003 was
attributable to tightened capital markets mainly experienced in the first half of 2003 as customer spending remained cautious, with many of our
customers realigning capital spending with their current levels of revenues and profits in order to maximize their return on invested capital.
Many of our customers continued to focus on conserving capital, decreasing their debt levels, reducing costs and/or increasing the capacity
utilization rates and efficiency of existing networks. Also, excess network capacity and competition continued to exist in the industry which led
to continued pricing pressures on the sale of certain of our products.
From a geographic perspective, the 7% decline in revenues in 2003 compared to 2002 was due to a:
Our consolidated revenues declined 42% in 2002 compared to 2001. Following a period of rapid infrastructure build-out and strong economic
growth in 1999 and 2000, we saw severe economic downturns in various regions around the world and a continued tightening in the global
capital markets and slowdown in the industry throughout 2001. Our revenues declined sequentially in 2001 due to lower capital spending by
industry participants and substantially less demand for our products and services as customers focused on maximizing their return on invested
capital. During 2002, we continued to see these constraints on capital expenditures by our customers. Also, excess network capacity continued
to exist in the industry. In addition, we saw continuing consolidation of service providers within the industry. This environment created a
change in our customers’ focus from building new networks to conserving capital, decreasing their debt levels, reducing costs and/or increasing
the capacity utilization rates and efficiency of existing networks.
From a geographic perspective, the 42% decline in revenues in 2002 compared to 2001 was primarily due to a 43% decline in the U.S., a 43%
decline in EMEA, a 35% decline in Asia Pacific, a 46% decline in CALA and a 40% decline in Canada. All regional declines in 2002
compared to 2001 were primarily the result of the factors mentioned above.
We expect that our consolidated revenues in 2004 will be slightly lower compared with 2003. The 2003 consolidated revenues included
revenues that were deferred from prior periods. Although we expect a slight decline of consolidated revenues in 2004 as compared to 2003, we
saw growth in several areas in 2004 primarily as a result of customers increasing their investments in:
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2003 vs. 2002
• 7% decline in revenues in the U.S. primarily due to capital spending restrictions experienced by our service provider customers and
their focus on capital and cash flow management in 2003 as well as tightened capital markets mainly during the first half of 2003.
This was partially offset by the release of certain software including the general availability of Succession 3.0 in the fourth quarter
of 2003 which triggered the recognition of associated revenues deferred from prior periods. In addition, revenues increased due to
the recognition of deferred revenues associated with certain data switch upgrades. Further, Global System for Mobile
communications, or GSM, and Code Division Multiple Access, or CDMA, customers upgraded and expanded their existing
networks in the second half of 2003;
• 12% decline in revenues in Asia Pacific due to capital spending restrictions by our service provider customers;
• 5% decline in revenues in EMEA primarily due to capital spending restrictions by service provider and enterprise customers and
tightened capital markets mainly during the first half of 2003 which was partially offset by increases in revenue related to new
GSM contracts with certain service providers and the impact of favorable foreign exchange effects associated with the euro;
• 9% decline in revenues in Canada primarily due to capital spending restrictions experienced by our service provider customers and
their focus on capital and cash flow management, the completion of certain customer deployments as well as tightened capital
markets mainly during the first half of 2003, which was partially offset by the impact of favorable foreign exchange effects
associated with the Canadian dollar; and
• 8% decline in revenues in CALA primarily due to the completion of a major contract in the first quarter of 2002 and continued
capital spending restrictions experienced by our service provider customers, which was partially offset by increases in revenue
related to new GSM contracts with certain service providers.
2002 vs. 2001
2004 and 2005