The stench of burnt fingers is hard to forget and investors in telecoms equipment makers should know it well. The sector has a history of sudden, severe slumps. False dawns are common as companies fail to restructure their way out of trouble.

Hence a 15 per cent drop in the value of Nortel shares on Friday. The whole sector is suffering the effects of cuts in spending by the telecoms operators. So indications last week that a big customer (probably Sprint) has halted capital expenditure sent investors in Nortel scurrying.