Industry indicators


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Are test equipment sales  a bellwether of the telecommunications and technology industry prospects?

I have been looking for macro indicators of what will happen in the telecommunications industry. We specialize in  data  security for telecommunications. Data security is a big issue for companies in flux – firing employees, turning more to outside contractors and merging operations. The question is whether or not data security is getting slashed out of 2009 budgets.

One macro indicator is sales forecasts of technology vendors to the telecom industry – Cisco, which is regarded as being very good at forecasting, predicts a sales drop of 10 percent in the next quarter. However – the supply chain doesn’t stop with telecom equipment and  network security manufacturers like Cisco, Nortel. HP. Juniper, IBM, Alcatel and Nokia.   These vendors  need test equipment to test their products on telco and corporate networks.

Amid the telecom industry storm of warnings and worries, test equipment vendor Spirent Communications plc (NYSE: SPMmessage board; London: SPT) believes it’s on-target for 2008 and a capable of maintaining a similar level of sales during 2009.

The crash of Lehman Brothers , in September 2008 caused widespread financial woes by companies of all shapes and sizes and also caused a blip for Spirent. But – Spirent sales bounced back in October. Telco equipment firms continue to spend in areas that are core to their strategies: wireless, carrier Ethernet, data center developments, and the automation of lab-based testing processes. “Customers are aiming for better utilization of their resources,” says the Sprient CEO.

Since customers need better utilization of their resources, that means that we need to show how our data security solutions will not only help protect telecom digital assets but also reduce the cost of ownership and do the job with less head-count.

I suppose I didn’t really need Spirent for that insight.

See  the full article on Light Reading

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