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By CNET Networks, 10 September 2002 09:53

NEWS The top communications equipment manufacturers saw their market share increase in the second quarter as the overall market dropped significantly, according to a recent study. Cisco Systems held on to first place with 14.6 per cent of the $27.3bnn market in the quarter, according to the study by Synergy Research Group. Alcatel, Ericsson, Nortel and Siemens also saw their market shares increase compared with the first quarter. But overall, the market dropped 27 per cent from the previous year and nearly 5 per cent from the previous quarter. Some areas of communications equipment spending stabilised or increased during the quarter, including sales of wireless equipment and packet-based enterprise products such as routers and switches, according to the study. But with sales to traditional communications carriers such as SBC Communications and AT&T continuing to fall, the overall market for communications equipment won't rebound in 2002, and maybe not even next year, said Joshua Johnson, an industry analyst with Synergy Research Group. "It's kind of a continuation of what we saw last quarter," Johnson said on Monday. Sales of communications equipment - routers, switches, private branch exchange (PBX) systems, base units for wireless networks - have been in a freefall since early last year. With the economic downturn, companies have cut back on their capital expenditures. Additionally, hundreds of equipment purchasers - from small dot-coms to telecom giants such as WorldCom - have closed shop or filed for bankruptcy. Purchases by traditional carriers comprise about 70 per cent of total communications equipment sales, according to Johnson. Sales to non-carriers make up about 30 per cent, he said. Even though the major equipment manufacturers saw their market share increase sequentially, most of them saw share - and their sales - fall when measured on a yearly basis. Alcatel, for instance, saw its market share drop from 11.9 per cent in the second quarter last year to 10.1 per cent in the first quarter of this year, and then to 10.2 per cent in the second quarter, according to the Synergy report. Meanwhile, Alcatel's equipment sales fell from $4.4 billion in the year-ago quarter to $2.9 billion in the first quarter of 2002 and $2.8 billion in the second quarter. Nortel saw similar results. Nortel's market share increased marginally from 9.7 per cent in the first quarter of this year to 9.8 per cent in the second quarter. But its market share was down from 11.3 per cent in the year-ago quarter. In addition, its sales plummeted from $4.2 billion in the year-ago quarter to $2.8 billion in the first quarter of 2002 and to $2.7 billion in the second quarter. Of the big equipment players, only Cisco saw consistent increases in revenue and market share over the past year. The company's revenue rose from $3.6 billion in the second quarter last year to $3.7 billion in the first quarter of 2002, and to $4 billion in the second quarter. Moreover, its market share rose from 9.6 per cent in the year-ago quarter and from 12.9 per cent in the first quarter of 2002. Troy Wolverton writes for News.com