How will economy affect network equipment vendors?

It will be interesting to see how the recent financial turmoil affects network infrastructure vendors. Already, industry watchers and financial analysts are trying to pick out which companies will win and which will lose, as if we are about to witness a major economic Darwinian event.

Just last week, Jim Duffy highlighted a quote from a business blogger who predicts a consolidation in the telecom equipment industry will take at least one casualty: "Nortel doesn't make it out alive." 

Nortel has been trying to sell off its Metro Ethernet Networks unit in a "fast-track" process, though a slowdown in the overall economy can't be making it an easy process for the company.

Meanwhile, all eyes are also on Cisco, which has been trying to reset expectations for months. Despite its warnings, an event like a mere 129 layoffs of Cisco employees in Richardson, Texas, is enough to make industry observers twitchy.

Others, however, are not so twitchy, and in fact JMP Securities on Monday upgraded Cisco's stock from "market perform" to "market outperform," saying that the company is "agile" and a "survivor."

A few weeks ago Juniper Networks saw its stock downgraded by Merrill Lynch, as the analyst there felt that Juniper would start to see the slowdown that other network vendors are seeing, and another by Morgan Keegan earlier this month. 

Meanwhile, when it comes to IT spending on network and other equipment, Gartner insists that it has seen worse. And others are looking at different factors to figure out what the future holds for the IT industry. What do you think?

Jeff Caruso is site editor at Network World.