Nortel Networks Corp.’s lead in research and development spending in Canada is wider than a broadband mile, according to a study released Tuesday.
According to Toronto-based Research Inforsource Inc.’s Canada’s Top 100 Corporate R&D Spenders, the troubled telcom equipment maker spent about $750 million more than the other 99 entrants combined. The Kanata, Ont.-based company spent $5.95 billion, a 30 per cent increase from 1999.
“What we’re seeing is tremendous increase over the past year. The top 100 spending is actually increased by over 28 per cent, which is pretty stunning. Normally if you got even a 10 per cent increase that would be good news,” said Research president Ron Freedman.
“What’s also new this year is that we’ve got a pretty large expansion of the $100 million club. These are companies that spend $100 million or more on research and this year there were 15 companies in the $100 million club compared to only 11 in 1999.”
Communications equipment companies occupied four of the top 10 spots and in total spending. But if you take Nortel out of the mix, said Freedman, it places second after pharmaceutical and biotechnology.
Freedman attributed Nortel’s increased spending to increased revenues and then rising stock price, a vastly different picture from this year. Despite its recent problems, he said he didn’t expect anyone to knock Nortel off the top of the mountain next year adding Nortel spends as much on research as the Canadian government.
While Nortel’s ranking may be safe, the general market uncertainty will be felt next year, though Freedman said he remains hopeful.
“It’s clearly going to have a dampening effect both for Nortel and for the sector as a whole, and the reason for is that a lot of the major R&D spenders in the information and communication technology sector are tied in directly or indirectly with Nortel. So as goes Nortel so will go their fortunes,” says Freedman.
“It’s not an encouraging picture at the moment, but let me point out were only five months through the fiscal year and things could turn around by December.”
The top five was rounded out by Magna International Inc. ($246 million), Ericsson Canada Inc. ($237 million) and ATI Technologies Inc ($224 million).