Capex and equipment market update: 3Q08

Previously strong growth in global wireline equipment sales was dampened in 3Q08, as revenues grew only 5.9% versus 3Q07. Lower growth rates were seen across all segments, including “next-generation” segments such as core and edge routing and WDM optical networking. We believe many service providers have preemptively cut costs in response to the negative sentiment that is pervading global financial markets, before seeing concrete evidence of a recessionary impact on top-line revenues. We expect significant reductions in growth to continue into 2009.