Most recent mention of FFIV in the context of telco and general infrastructure spending slowdowns, from Briefing.com (see last few sentences of paragraph). Their general timeline for reinvestment in this sector, 6/01.
Ditech Communications (DITC) 6 7/8 -3 3/4: One look at the chart of this telecom equipment supplier exposes that investors were expecting an earnings warning from this company. Certainly wasn't a hard one to call given much publicized reductions in telecom capital spending (see our cautionary comments Dec. 5). The one thing left to question was the magnitude of the miss.... The size of DITC's shortfall will indeed be significant. Company now sees Q3 earnings in the range of breakeven to a loss of $0.05 a share, dramatically below the $0.46 profit anticipated by analysts. DITC attributes the disappointment to the delayed introduction of its OC-3 Echo Cancellation product (which will ship a qtr late) and an unexpected slowdown in infrastructure spending by its customers.... Appears that DITC management were about the only ones caught off guard by the slowdown.... Failure to anticipate weakness would lead us to believe that company's new full year forecast of $0.84 to $0.95 might also prove too optimistic, despite representing about a 50% reduction from previous expectations.... Historically, when telecom equipment companies have experienced a downturn in business, they have significantly underestimated the length and enormity of the slowdown. Which is why we think that many companies that have recently issued earnings warnings will be forced to guide down numbers again.... As a result, would be wise for investors to avoid the telecom equipment space, despite what would appear on paper compelling valuation opportunities. Capricious earnings estimates make it difficult to impossible to arrive at a firm forward-looking valuation.... Investors should pass on telecom until the second-half of the yr, allowing companies enough time to thoroughly disappoint investors and an opportunity for the stocks to put in a bottom. Dust off this Story Stock in six months and think FFIV, CMTN, DITC, INKT. If things work out, you will find these stocks trading in the single-digits, at the tail-end of the downtrend, and ready for a ramp.... The main point is to avoid the group for now, but not to forget about a sector that has historically come back with a bang. -- Damon Southward Briefing.com |
