RESEARCH ALERT-Merrill on telecom equipment budgets
Reuters, 09/18/2000 14:53
NEW YORK, Sept 18 (Reuters) - Merrill Lynch said investors' fears about an expected drop in spending on telecommunications equipment are overblown, since demand for equipment should continue to be very strong.
-- said every year investors get spooked by concerns that U.S. telecommunications carriers will stop spending money on equipment, which triggers a drop in telecoms equipment manufacturer stocks.
-- said U.S. carriers are indicating that their total capital expenditures for 2001 will decline by 3 percent.
-- said in previous years, the initial forecasts of spending by carriers have been inaccurate, compared with their actual spending.
-- said equipment companies should continue to see strong demand since U.S. carriers must continue to spend money to remain competitive; spending on equipment is growing as a percentage of overall capital spending; U.S. operators represent only a portion of a broader global equipment market.
-- said expects that carriers ultimately will arrive at spending budgets that indicate capital spending growth of about 10 percent.
-- said 10 percent growth would be below the growth expected in 2000, but it represents a more sustainable level.
--said it expects that spending on telecoms equipment by U.S. service carriers will grow in the high teens, a rate consistent with the growth forecast for the industry.
-- said some equipment segments will continue to grow faster than the overall industry, including optical networking, high-speed data networking and strategic access technologies such as ADSL.
-- said Cisco Systems Inc. (NASDAQ:CSCO) and Nortel Networks Corp. (TSE:NT) are the best-positioned companies in these areas.
-- said companies such as Tellabs Inc. (NASDAQ:TLAB),
ADC Telecommunications Inc. (NASDAQ:ADCT), and UTStarCom Inc. (NASDAQ:UTSI) should continue to perform well.
Copyright 2000, Reuters News Service |
