Understanding the promise of the two companies profiled in this week’s column requires a little context on the way communications has evolved over the past several decades.

Before the Internet, telephones were the best way for long-distance communication (meaning, of course, any distance beyond ear shot), and the same basic group of companies such as Nortel Networks Corp. (NYSE: NT). and Lucent Technologies Inc. did a great business selling the same basic telephone equipment to service providers year after year.

The rise of the Internet then gave rise to companies like Cisco Systems Inc. (Nasdaq: CSCO), which makes gear that connects and enables communications between computers.

Internet and telecom might have remained two distinct industries, except that telecommunications started evolving too. Cell phones gave way to mobile communications and improving phone and Internet technology made it possible to do more than just talk over phones.

Today, talking over phones, particularly cell phones, is going out of style as more and more people prefer to send text messages or use their smart phones to play games, download music and watch video.

All of the old telecom equipment providers like Nortel and Lucent, today a part of Alcatel Lucent (NYSE: ALU), are trying to compete in this market for new networking gear to enable better mobile and broadband communications. This equipment, though, is so different from the so-called legacy gear they traditionally sold that they are often regarded as dinosaurs challenged to compete with a crowd of startups that more fully understand modern communications.

Case in point: Alcatel Lucent, a company formed last year through the merger of two of the world’s largest telecom gear makers, earlier this month issued its third revenue warning in less than a year and said its business was struggling.

---You can read the FULL article when you register (registration is free!) or sign-in to SmallCapInvestor.com---