Our special focus this week is on Telecommunications Equipment. We spoke to Raimundo Archibold, of Kaufman Brothers, who spoke to us a little bit about his disappointment in the space this year. He cited two reasons why the space had dissappointed: AT & T’s low capital spending and a decline in wireless spending in general.
Mr. Archibold: Generally, speaking we’ve seen disappointing results for the most part, largely as a consequence of two factors.
- In North America in particular, AT&T (T) capital spending has been below plan through the first three quarters of the year, particularly in wireless as well as in their BellSouth franchise. AT&T is about 25% of the cap ex budget in North America.
- There has been some deceleration in wireless spending in general, largely because a significant part of 3G deployments have occurred.
Now what you are seeing is generally incremental expansion of network coverage as well as capacity buying and that has caused some deceleration in growth. We’ve seen that also among many of the companies exposed to telecom equipment, actually wireless sectors such as Ericsson (ERIC), but in particular Tellabs (TLAB). From that perspective, it has been somewhat disappointing in the telecom space in general. On the cable side, it has been pretty much as expected with continued expansion of voice services benefiting some of the cable equipment vendors, especially Arris (ARRS).
For the full telecommunications equipment issue, including interviews CEO of top telecommunications equipment companies, and stock picks, click here.
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