Just how quickly the economic situation has plunged can be gleaned froma side comment by Nortel CEO Mike Zafirovski during yesterday’s Q3conference call announcing a ghastly $3.4 million loss in the quarter.You may recall that on Sept. 17 Zafirovski called a surprise conferencefor financial analysts to warn this was coming because of deterioratingsales, during which he also put a for sale sign on the metro ethernetbusiness. A few carriers “chided” him, he recalled yesterday, forapparently panicking. “Within two or three weeks some of the CEOs andCTOs were calling to say ‘Gee, on second through we’re taking costsdown as well,’ ” Zafiroski said.

Then a fewweeks ago he was chatting with Nortel’s customer advisory committee,who told him to get purchases approved now they had to show ROI withintheir current fiscal year – ie. almost immediately – not in 12 months. “So what we’ve seen since Sept. 17 is a much more cautious view,” hesaid. “Purchases are being eliminated and or at mimum deferred.”

Somuch for the theory that networking and telecommunications spending arecorporate essentials and won’t be cut much. Zafirovski refused to giveguidance on what next year will bring, at least until he has to in thefourth quarter. For now, we’ll leave you with his words about spendingrestraint and ask if you think he’s being optimistic: “I do notnecessarily believe this will be a multi-year process, but we do thinkthis activity will be there for Q4 and a good part of2009.”