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Oct. 24, 2014, 12:32 PM
- Though Ericsson (ERIC -3%) beat Q3 estimates, the mobile infrastructure giant stated North American business activity "slowed down during the quarter as operators currently focus on cash flow optimization." It added North American spending patterns make it tough to judge near-term demand.
- Ericsson's North American sales fell 3% Y/Y to $1.93B, partly offsetting strong growth in China, India (+56%), the Middle East (+38%), and other emerging markets. Top-line figures were boosted some by M&A.
- AT&T and Verizon have been taking cautious approaches to capex, and Sprint (though investing heavily in 4G following the SoftBank deal) has been looking to cut costs under new CEO Marcelo Claure. The U.S. and Japan have been ahead of many other developed markets in ramping 4G coverage.
- Juniper (JNPR -6.3%) offered light Q4 guidance two weeks after delivering a Q3 warning, and reported its service provider sales were down 6% Y/Y due to soft demand from Asia-Pac, EMEA, and (especially) U.S. carriers.
- When the world's #2 carrier router vendor was asked on the CC (transcript) about 2015 sales, CEO Shaygan Keradpir admitted Juniper has poor near-term visibility, and that a rebound could take time. "Because we think these cycles typically take 2 to 4 quarters ... our planning assumption is that growth will return in the second half of 2015."
- Nokia and Infinera recently offered more positive numbers/commentary. Bulls have argued strong data/video traffic growth will lift capex. Bears have argued soft (if not negative) carrier revenue growth will continue pressuring spending.
- Decliners: ALU -1.6%. JDSU -2%. INFN -3.1%. CIEN -2.5%. CALX -2.5%. FNSR -1.8%. ADTN -1.5%. The Nasdaq is up 0.4%.
Oct. 22, 2014, 5:38 PM
- Infinera (NASDAQ:INFN) guided on its Q3 CC for Q4 revenue of $175M-$185M, above a $160.4M consensus.
- The outlook serves as a breath of fresh for the telecom equipment industry, given its recent issues. Infinera bulls have argued for some time the company's strong 100G optical exposure would allow it to outperform.
- Rival Ciena (NYSE:CIEN) is ticking higher in response.
- Infinera's Q3 results, PR
Oct. 15, 2014, 4:07 PM
- In an encouraging sign for beaten-down telecom equipment and chip/component stocks, Adtran (ADTN +5.7%) managed to rally even though it guided on its Q3 CC (transcript) for a low-to-mid teens Q/Q revenue drop. Consensus (doesn't appear to have fully accounted for Adtran's Q3 warning) was for revenue to drop 2% to $154.9M in Q4.
- Adtran attributed much of its Q3 weakness to "a decline in Europe as a large project there had a seasonal slowdown." Enterprise softness also took a toll.
- The company "[expects] to see an upturn in this business" in 2015, but European sales are expected to remain soft in Q4. Other equipment vendors, such as Juniper (JNPR +2%) and Ciena (CIEN +2.7%), have provided weak guidance blamed on U.S. wireline capex; AT&T is generally seen as a big culprit.
- In addition to Juniper and Ciena, many other industry names have closed with healthy gains. PKT +6.3%. INFN +3.4%. ZHNE +6.7%. ALLT +5.2%. AFOP +4.5%. AMCC +12.5%. CYNI +4%. CALX +3.3%. FNSR +3.1%. UBNT +4.2%. OPLK +3.4%. RKUS +3.3%.
Oct. 6, 2014, 11:30 AM
- EZchip (EZCH -12.5%), a top supplier of network processors for edge/access routers, now expects Q3 revenue of $19M, below prior guidance of $22M and a $22.6M consensus.
- CEO Eli Fruchter: "We have seen weakness in orders as well as inventory adjustments across most of our key customers that are serving the carrier networking equipment space. We believe this is a temporary slowdown, caused primarily by a weaker carrier spending environment that the market is currently going through." Like others, he's optimistic growth will soon pick up.
- Fruchter's remarks echo those from Cisco (EZchip's top customer), Juniper, Ciena, Finisar, JDS Uniphase, and several other firms. Soft North American wireline capex (led by AT&T) has especially been taking a toll on the industry.
- Several telecom equipment and component/chip suppliers are following EZchip lower. CIEN -2.8%. CAVM -2.8%. OCLR -2.7%. ZHNE -2.7%. CYNI -3.1%. AFOP -2.1%. NPTN -2.4%. OPLK -1.7%.
Oct. 3, 2014, 1:37 PM
- Adtran (NASDAQ:ADTN) expects Q3 revenue of $162M-$163M and EPS of $0.23-$0.24, below a consensus of $177.4M and $0.27.
- The company blames a bigger-than-expected Q/Q drop in European sales, and a "softer enterprise spending environment." On the other hand, sales to U.S. carriers (a weak spot for many companies as of late) grew Q/Q, and Adtran forecasts "a re-acceleration in carrier spending both in Europe and the U.S." in 2015.
- Telecom equipment peer Cyan (CYNI -5.4%) is selling off on a day the Nasdaq is up 1%. Calix (CALX -1.1%) is off moderately.
Sep. 4, 2014, 7:31 AM| Sep. 4, 2014, 7:31 AM | Comment!
Sep. 4, 2014, 7:02 AM
Sep. 3, 2014, 5:30 PM
Aug. 13, 2014, 2:45 PM
- B. Riley and Piper have downgraded JDS Uniphase (JDSU -8.9%) following its light Sep. quarter outlook. Each cites the impact of soft carrier spending.
- B. Riley's Dave Kang (downgrade to Neutral) notes the AT&T/DirecTV deal has affected Ma Bell's spending (previous), and that industry demand is pressured by a transition to software-defined networking (SDN) architectures that's still in its early stages.
- Kang: "In hindsight, we significantly under-estimated the potential impact of the SDN transition on the telecom equipment industry." He notes the transition is hurting JDS' test equipment/software sales (expected to fall to $160M-$175M in FQ1 from $199M in FQ4) more than its optical component sales. Optical component/laser division sales are expected to total $200M-$210M in FQ1 vs. $196.9M in FQ4.
- On the CC (transcript), CEO Tom Waechter admitted North American carriers "have ratcheted down wireline spending" (echoes of Juniper), and that wireless investments "have been tepid due to rapid changes in network technology architectures." On the other hand, he states component demand "remains healthy with notable strength in Datacom, 100G modulators and China's infrastructure spend."
- Ciena (CIEN -2.7%) and Fabrinet (FN -3%) have joined the ranks of companies following JDS lower. Cisco reports after the bell.
Aug. 11, 2014, 4:16 PM
Aug. 10, 2014, 5:35 PM
Jul. 23, 2014, 1:45 PM
- Juniper's (JNPR -9.8%) soft Q3 guidance, along with its related commentary on U.S. telco demand, is taking a toll on fellow telecom equipment suppliers Cisco (CSCO -1.2%), Ciena (CIEN -3.2%), Cyan (CYNI -2.5%), Zhone (ZHNE -6.5%) Ruckus (RKUS -1.6%), and Sonus (SONS -3.8%).
- Optical component vendors JDS Uniphase (JDSU -2.9%) and Finisar (FNSR -2%) are also off, as are several chipmakers (previous) with heavy networking/telecom exposure.
- On its CC (transcript), Juniper stated "market dynamics including M&A activity" are affecting the "sequencing and timing" of U.S. carrier projects. Jefferies reported in June AT&T has significantly cut its wireline capex in the wake of the DirecTV deal.
- There has been speculation AT&T is keeping a lid on wireline capex ahead of the full rollout of its ambitious Domain 2.0 initiative, which will feature the launch of software-defined networking (SDN) and network functions virtualization (NFV) platforms.
- Juniper insists it remains well-positioned with the aforementioned U.S. carriers, and that it has "major design wins" for next-gen projects. The company adds demand remains healthy with U.S. federal, cable, and Internet clients.
- The company's router revenue rose 7% Y/Y in Q2 to $617.8M, and its switch revenue rose 25% to $199.8M. Security product revenue fell 8% to $111.6M. The Junos Pulse VPN software ops (about to be sold for $250M) contributed $31.4M in revenue ($15.9M product, $15.5M service).
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