Reuters: Hot Stocks: UPDATE 2-Spirent Communications sees weak demand lingering

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UPDATE 2-Spirent Communications sees weak demand lingering Feb 28th 2013, 12:10 Thu Feb 28, 2013 3:55am EST (Adds analyst comments; background; details) Feb 28 (Reuters) - Telecoms testing company Spirent Communications Plc reported a 3 percent drop in full-year profit as U.S. clients cut spending and it forecast only modest revenue growth for 2013, sending its shares down as much as 6.8 percent. The FTSE 250 company, which tests ethernet networks and 3G and 4G wireless networks and devices, said it did not expect spending by telecom service providers to pick up in the first half of the year. Spirent has been hit particularly hard by a decline in capital expenditure by clients in the United States, which contributed 51 percent of the company's 2012 revenue. Spirent customers such as Verizon Communications Inc and AT&T Inc have had wireless margins squeezed by the hefty costs associated with selling smartphones like Apple Inc's iPhone. However, Jefferies & Co analyst Lee Simpson said he expected some service providers to start spending in the second half, and he maintained a "buy" rating on the company's stock. Spirent's pretax profit declined to $110.7 million in 2012 from $114.3 million a year earlier. Revenue rose less than 1 percent to $472.4 million. Sales in the company's service assurance business, which provides tests to monitor and diagnose telecom network issues, declined 29 percent to $38.4 million as service providers cut capital spending. Sales growth in the company's core performance analysis division, which tests current and next-generation mobile phones, slowed to 4 percent from 14 percent last year, hit by a slump in sales from positioning tests. Spirent shares were down 5.7 percent at 156 pence at 0853 GMT on the London Stock Exchange. (Reporting By Richa Naidu in Bangalore; Editing by Joyjeet Das) Link this Share this Digg this Email Reprints

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