Friday, May 8, 2009

Component Makers Hit Hardest in Q1

A preliminary look at the first quarter financial results for the telecom industry reveals poor but not surprising results, reflecting the impact of the recession. Service provider revenues are down versus the same quarter last year, but only a few percentage points, while capital spending and attendant equipment vendor revenues are down 15–25%. Component makers and contract manufacturers are also reporting revenue declines averaging 20–30% versus the year-ago quarter.

Among equipment vendors, revenues declined 15% on average, with Alcatel-Lucent down 6.9%, NSN down 12.1%, and Cisco down 21.5% (with exchange rate effects factored out for Alcatel-Lucent and NSN). Further down the supply chain, component revenues were down almost 20% among sampled companies, and contract manufacturing revenues were down nearly 28%, due to a ‘bullwhip effect’.

A couple of bright spots are also starting to appear. Wireless backhaul leader Ceragon reported a revenue decline of only 7%.

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