Overlooked by most Wall Street analysts last week were two key announcements issued by Sprint and Worldcom that could put to rest the speculation that telecommunication carriers are going to spend less on technology equipment in 2001. On Friday, the same day it reduced 2001 earnings forecasts, Sprint told the investment community that it planned to spend $6.2 billion in capital expenditures, up nearly 50% from the 2000 level of $4.3 billion and well above Wall Street's prior estimate of $4 billion. On Thursday, Worldcom lowered analysts' 2001 expectations, citing pricing pressure in voice services, foreign exchange, and, most importantly, increased capital spending to sustain long- term growth. Although Worldcom gave no specific guidance, investors can infer that analysts' models did not properly reflect Worldcom's 2001 spending plans. Both carriers intend to focus on growing their data/Internet Protocol business, benefiting the infrastructure builders like Cisco, Nortel, and Ciena as well as component makers like JDS Uniphase.
Dave --
Thanks for posting the very welcome confirmation of mega-carriers' increased spending for advanced networks. Here at the AEA conference I've asked several CEOs if they see any slowdown in optical networking spending and none have.
Two good plays worth considering: EMKR (VCELS will be the largest product area within two years) and TXCC (TranSwitch) who sell multi-protocol switches to all the large vendors: NT, ALA, Siemens, LU, TLAB. . .
Both companies are ramping capacity to meet customer demands.
Pat |
