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Telecom hardware stocks slide on AT&T capex report

  • Jefferies reports AT&T (T -0.1%) significantly cut its wireline capex starting last month.
  • It thinks many companies could be affected, including equipment vendors Alcatel-Lucent (ALU -2.2%), Ciena (CIEN -3.9%), Juniper (JNPR +0.2%), and Adtran (ADTN -5.1%), and component vendors JDS Uniphase (JDSU -2%) and Finisar (FNSR -0.7%).
  • As its is, AT&T's 2014 capex budget ($21B) is down $200M from 2013's spending level. Moreover, the carrier's huge mobile infrastructure needs and the DirecTV deal could be motivating it to cut wireline spend.
  • Also: AT&T may be looking to keep capex down ahead of the full rollout of Domain 2.0, an initiative meant to improve network flexibility, lower costs, and cut provisioning times through the embrace of software-defined networking (SDN) and network functions virtualization (NFV).
  • MKM has argued Domain 2.0 will be a negative for Cisco, but a positive for Ciena and Finisar, among others.
Comments (8)
  • Siwanoy
    , contributor
    Comments (401) | Send Message
     
    T can't cut capex much beyond current levels or it is foregoing any possibility of growth. If this report is anywhere near accurate, it's time to dump this dog.
    2 Jun, 08:51 PM Reply Like
  • lawheelock
    , contributor
    Comments (3) | Send Message
     
    What the heck is capex? I have been a T owner for 60 years, but do not know what capex means.
    2 Jun, 09:18 PM Reply Like
  • cfboller
    , contributor
    Comments (289) | Send Message
     
    lawheelock

     

    Capex

     

    These are expenditures the benefits of which will be realized in future years. Hopefully the benefits will exceed the expenditures.

     

    If the benefits do not materialize the expenditures are expensed without the benefits.
    3 Jun, 10:42 AM Reply Like
  • Sam Johnston1
    , contributor
    Comments (506) | Send Message
     
    CAPITAL EXPENDITURES.....ALLZ YA HAD TO DO WAS GOOGLE IT.
    3 Jun, 12:38 PM Reply Like
  • lawheelock
    , contributor
    Comments (3) | Send Message
     
    Probably means capital expenses, but I don't speak coherant wall street
    2 Jun, 09:21 PM Reply Like
  • Phil_GA
    , contributor
    Comments (41) | Send Message
     
    Strictly speaking, yes -- capex is usually short for "capital expenditures."

     

    In the realm of wireline, it essentially means spending on any sort of asset (e.g.: switches, cabling, multiplexers, etc.) that actually either builds out the infrastructure or keeps it going (as in, maintenance).

     

    I believe Siwanoy (above comment) is right in his first sentence, but wrong in the second. AT&T cannot cut its infrastructure costs beyond a certain point, else it risks seriously damaging its own wireline infrastructure.

     

    And capex in wireline was part of the point of Project VIP; to get everything off of its conventional network and get it fully converted to IP-based (where older assets cost more money to maintain than newer).

     

    Bringing this together with AT&T's proposed buyout of DirecTV, however, doesn't make a whole lot of sense to me, except maybe as an uber-reaction to Comcast-Time Warner. After all, DirecTV is solely a video play, and the type of video play that will radically change over the next decade or two. I'm not sure what this buys for AT&T.

     

    Disclosure: Long T, consumer of T, DTV
    3 Jun, 09:28 AM Reply Like
  • duhaus
    , contributor
    Comments (320) | Send Message
     
    Correct lawheel it stands for capital expenditures i.e. hardware and infrastructure mostly for their landline services it appears from the report.
    2 Jun, 09:24 PM Reply Like
  • urban farmer
    , contributor
    Comments (6) | Send Message
     
    att keeps offering me 3 times as fast internet at 18 bmp ..
    when I currently have 30 mbp from my internet co. SORRY att your service is to slow . time to upgrade or get lost
    6 Jun, 09:08 AM Reply Like
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