UBS cuts telco supplier estimates
(All figures in U.S. dollars)
OTTAWA, June 24 (Reuters) - Citing seasonal weakness and a lackluster Supercomm trade show, UBS Warburg cut estimates and price targets for a range of telecom equipment suppliers on Monday, including Nortel Networks Corp. (NYSE:NT - News) (Toronto:NT.TO - News) and Lucent Technologies Inc. (NYSE:LU - News)
"We our lowering our estimates for Juniper, Lucent, Nortel and Tellabs reflecting our view that the September quarter will be lower in sales than the June quarter," said analyst Nikos Theodosopoulos in a report.
"We continue to see weak capital spending trends by telecom operators in the current June quarter and we do not expect to see a pick-up in the typically weak summer months in the third quarter."
Companies have suffered a sharp decline in spending from phone carriers and corporate customers.
"We still expect a seasonal sequential improvement in the December quarter on the order of 5 percent, although it is really difficult to predict the fourth quarter at this point, given no visibility in order trends for the quarter," Theodosopoulos wrote.
UBS cut revenue estimates for Lucent's September quarter to $3.08 billion from $3.17 billion, fiscal 2002 to $13.23 billion from $13.31 billion, and fiscal 2003 to $13.16 billion from $13.42 billion.
UBS forecast a deeper 2002 loss of 69 cents per share from 68 cents per share, and a 2003 loss of 17 cents per share from 16 cents.
"Our earnings model assumes lower sequential opex (operating expenditures), which reflects our view that the company will announce additional downsizing measures when it reports the June quarter earnings," Theodosopoulos wrote.
The 12-month stock target was trimmed to $2.35 from $2.70 a share.
Nortel's third-quarter revenue estimate was cut to $2.76 billion from $3 billion, the 2002 target dropped to $11.44 billion from $11.99 billion, and the 2003 target fell to $11.57 billion from $12.81 billion.
UBS forecast a deeper 2002 loss of 29 cents per share from 26 cents, and a 2003 loss of 9 cents per share from 4 cents.
The 12-month stock target was cleaved to $2 from $3 a share.
"We believe the downside risk to Nortel share price could be as low as $1.40," Theodosopoulos wrote. "From a liquidity standpoint, we now have Nortel exiting 2003 with $460 million in cash without the company tapping any of its credit lines."
UBS cut revenue estimates for Juniper Networks Inc. (NasdaqNM:JNPR - News) for the third quarter to $112 million from $120 million, for 2002 to $468 million from $485 million, and for 2003 to $545 million from $604 million.
Its 2002 earnings estimate of 1 cent per share was unchanged, but the 2003 target was cut to 13 cents per share from 19 cents. The 12-month stock target dropped to $8 from $12 a share.
UBS cut Tellabs Inc. (NasdaqNM:TLAB - News) third-quarter revenue estimates to $348 million from $383 million, 2002 estimates to $1.45 billion from $1.55 billion, and 2003 to $1.49 billion from $1.67 billion.
It cut 2002 earnings estimates to 5 cents per share from 10 cents and 2003 to 10 cents per share from 20 cents. The 12-month share price target fell to $9.75 from $11 a share.
ADC Telecommunications Inc. (NasdaqNM:ADCT - News) earnings targets were maintained, but the 12-month price target was cut to $3.40 from $4 a share.
($1=$1.52 Canadian) |
