The Lightwave Blog

Posted by Stephen Hardy

AT&T;'s response to inquiries regarding Morgan Keegan & Co.'s note yesterday regarding a plan to reduce its supplier count to two for each of about 14 technology domains: "We have no comment on this."

Simon Leopold, communications equipment analyst and managing director at the broker-dealer, issued a note yesterday saying he was starting to take seriously information he had received regarding a potential AT&T; plan to drastically reduce the number of equipment vendors with which the company does business. The goal, based on what Leopold said he had heard, was to have only two supplier in each of "roughly" 14 technology domains. (Leopold did not list the domains in the note.) Naturally, it seems likely that AT&T; would end up with fewer than 28 suppliers, on the assumption that some suppliers would remain viable in multiple domains.

The initiative has three goals, according to the note: cost savings, risk reduction (particularly in the face of Nortel's bankruptcy filing), and streamlining of major projects. AT&T;'s success with Alcatel-Lucent on the U-Verse roll out served as a proof point of this last element, Leopold suggests.

While Leopold asserts, "[w]e consider it premature to panic," this news, if true, clearly would make systems suppliers nervous -- particularly smaller ones whose narrower product lines would potentially lessen their opportunities to stay engaged.

As I've indicated above, AT&T; isn't shedding light on Leopold's report. (The quote above came courtesy of Jenny Bridges, who handles trade media inquiries at the carrier.) If anyone has any further info, I'm all ears.

Labels: ATT, supplier reduction