SBC spending outlook lifts network gearmaker shares
SAN FRANCISCO, March 8 (Reuters) - Shares of network equipment makers posted solid gains on Friday helped by SBC Communications Inc. (NYSE:SBC - news), which said it would maintain more than $9 billion in capital spending this year and would continue building its data and Internet Protocol network.
SBC, the No. 2 U.S. local telephone company, on Thursday said it would meet its growth goals this year and develop a national data network.
That, and hopes that a recovering economy will allow corporate ``enterprise'' customers to hike information technology spending, helped lift networkers' shares on Friday.
Shares in Foundry Networks Inc. (NasdaqNM:FDRY - news) rose roughly 17 percent, or $1.22, to $8.22.
Shares on No. 2 Internet equipment maker Juniper Networks Inc. (NasdaqNM:JNPR - news) rose about 9 percent, or $1.18, at $13.75.
Riverstone Networks Inc. (NasdaqNM:RSTN - news) shares -- which lost half their value in one day last week after the company warned it would miss fourth-quarter earnings estimates -- gained about 8 percent, rising 48 cents to $6.65.
SBC's announcement brought hope that carrier capital spending has stabilized, analysts said, noting that network gear suppliers making equipment for underequipped urban area networks stand to benefit most.
``We believe that SBC's announcement reconfirms that regional bells are committed to making significant investments in the metropolitan area network in 2002-2003,'' Pacific Growth Equities analyst Erik Suppiger wrote in a research note.
Meanwhile, a healthier economy may allow corporations to resume IT projects, analysts added.
Shares of network gear suppliers sank last year as telecom carrier spending plunged and corporate IT spending tightened in response to the sluggish economy.
``We've been saying for two weeks that enterprise is stabilizing,'' said Buckingham Research Group analyst Gina Sockolow. ``The feedback is that things aren't falling apart. Corporate spending in the U.S. is up modestly.''
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