Dow Jones Newswires -- May 5, 1997
Lehman Bros. Sees Cap Spending Windfall For Telco Equip Cos.
By Shawn Young
NEW YORK (AP-Dow Jones)--Capital spending by phone companies is likely to exceed current projections and create a bonanza for equipment makers, according to a report issued Monday by Lehman Bros. Inc.
Total capital spending by telecommunications companies is likely to grow at an average annual rate of 7% between 1997 and 2000, said the report by analyst Tim Luke.
The long-distance companies, especially AT&T Corp. (T) and WorldCom Inc. (WCOM), will lead the spending, especially in 1997, when Luke projects that capital spending for all of the telecommunications companies will rise by 17%.
AT&T said in March it would nearly double its capital spending to about $9 billion this year. Much of that money will be spent on improvements to its network, the company said.
Local phone companies also will spend more, Luke said. He projected that mergers will not prevent Bell Atlantic Corp. (BEL), Nynex Corp. (NYN) and SBC Communications Inc. (SBC), which recently acquired Pacific Telesis Group, from spending a total of $100 million to $200 million on equipment and infrastructure during the year.
All the major equipment makers should benefit from the accelerated spending, Luke's report said.
AT&T's planned upgrades should benefit Lucent Technologies Inc. (LU), Tellabs Inc. (TLAB), Ciena Corp. (CIEN) and Northern Telecom Ltd. (NT), among others.
Rapid growth in demand for network access systems should benefit ADC Telecommunications Inc. (ADCT), Pairgain Technologies Inc. (PAIR), DSC Communications Corp. (DIGI) and Adtran Inc. (ADTN).
Providers of wireless equipment such as Motorola Inc. (MOT), Nokia Corp. (NOKA), L.M. Ericsson Telephone Co. (ERICY) Qualcomm Inc. (QCOM) and Lucent also will gain from increased phone company spending. Networking companies such as Cascade Communications Corp. (CSCC) and Cisco Systems Inc. (CSCO) also should benefit, the report said |
