An investor and blogger on Yahoo's Tech Ticker site doesn't expect Nortel to survive the current market downturn which he says is stalling big infrastructure buildouts.

Paul Kedrosky, whose business blog is dubbed "Infectious Greed," says the slowdown will force a consolidation in the telecom equipment industry, and "Nortel doesn't make it out alive." Nortel is reeling right now from a slowdown in spending among carrier and enterprise customers, and is looking to sell its Metro Ethernet unit to fund other initiatives.

Nortel declined to comment.

Kedrosky says projects like 3G buildouts in China are financed by debt and will stall due to unavailable credit. Infrastructure vendors have yet to price this into their financials, he says, adding that tougher times are in store for the telecom equipment sector.

Kedrosky expects the telecom infrastructure market to decline faster than the overall economy. To date, it's been in lockstep.

"We're beginning to see the very first signs of that," Kedrosky says. "What I expect to start hearing (from companies) over the next couple of quarters is...that there will be a slowdown. I expect that they are going to start warning about this."

Kedrosky says investors in this sector should beware.

"It's not yet that people have gone the additional step of saying, 'Far more of these folks are actually, indirectly, highly dependent on the credit market,'" he says. "If that's not available, your project stops."

Kedrosky says this will have a ripple effect on the device or user interface market as well, as newer, more powerful gadgets are delayed because of the service limitations of stalled network projects.

As a result, consolidation will ensue, and some companies will not make it through.

"There's been lots of chatter about what's going to happen to Nortel," Kedrosky says. "Whether Siemens ends up being the acquirer, or Nokia or someone else, they would be one of my top candidates" to disappear.

Whoever acquires Nortel will get them at a bargain. The company's market capitalization, once US$300 billion, is now less than US$1 billion -- less than what the company is reportedly seeking for the Metro Ethernet business alone.