Spirent sees worse troubles ahead

Industry insiders believe the telecommunications sector is heading for at least six months of serious gloom
Written by Graeme Wearden, Contributor on

British-based telecommunication network tester Spirent warned on Thursday that conditions in the telecommunications sector are likely to deteriorate in the second half of this year.

Despite recording a 39 percent rise in profits for the first half of its financial year to 30 June, Spirent is convinced that the next six months will be very tough. Around 500 jobs are to go, mostly from its US operations, and it is writing off £248m from the value of recent telecoms acquisitions.

Spirent provides testing equipment and services to major telecoms companies. Chief executive Nicholas Brookes is understood to have told reporters that profits for the whole of this financial year will be lower than the year before -- suggesting that a massive drop in spending in the telco sector could be imminent.

In the first six months of 2001 Spirent made a profit of £73.6m, compared to £52.8m for the same period the year before. Brookes claimed that this performance, at a time of worsening market conditions, was credible. "However, our performance in the second half will be depressed by difficult conditions in our major markets both in North America and, increasingly, in Europe," he said, warning that sales volumes were being hit.

Spirent had been scheduled to release its first-half financial results on 10 September, but brought forward the announcement so as to warn its investors of the predicted damage to profits.

Brookes sounded a positive note, claiming that Spirent was "continuing to invest to enhance our product leadership and in sales and marketing to extend our global reach and grow our market share."

The stock market reacted badly to the announcement, with Spirent's shares price plunging by 28 percent in opening trade. They soon recovered slightly in morning trading to 117p, down 16 percent.

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