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Optical/IP

Wireless Kit Back From the Dead

Nokia Corp. (NYSE: NOK) and Andrew Corp. (Nasdaq: ANDW), both major players in the cellular networking equipment market, have today raised revenue and profit guidance for the fourth quarter, sending a signal that carriers are once more investing in the future of their networks.

Andrew Corp., a supplier of RF subsystems (power amps, filters, antenna, and so on) to OEMs and network operators, said today that revenues for its first quarter of 2004 would come in the $400 million to $410 million range, versus earlier guidance of $320 million to $350 million. Earnings are expected to increase to $0.06 to $0.08 per share, up from guidance of $0.01 to $0.04 per diluted share (see Andrew Ups Q1 Guidance).

Andrew Corp. executives were unavailable for comment this morning but will present at the Needham & Co. Growth Conference in New York later today.

Also this morning, Nokia said sales at its wireless infrastructure division would be €1.7 ($2.16 billion) billion for the fourth quarter of 2003, versus previous guidance of €1.4 billion ($1.78 billion), due to higher than anticipated spending by network operators. Margins rebounded to 12% from expectations that the division would break even over the quarter (see Nokia Stock Rockets).

Further evidence of the upturn came from Remec Inc. (Nasdaq: REMC) CEO Ron Ragland, speaking at the Needham & Co. conference yesterday. "After the drought, it's good to see things picking up in this industry," said Ragland. "The recovery is two and half quarters old, and we've seen substantial improvements in our margins."

Ragland expects revenues to increase from $247 million in 2003 to $385 million in 2004 and $500 million in 2005. However, he warned that a return to profitability would not come this quarter but would have to wait until the firm had finished migrating its manufacturing operations from high-cost Finland to low-cost China. Remec is a supplier of RF subsystems and counts Nokia as a major customer.

At the time of this writing, Andrew Corp. stock is up 26 percent on the Nasdaq at $16.64, Nokia ADRs are up 13 percent on the New York Stock Exchange at $20.26, and Remec is up 3 percent on the Nasdaq at $9.57.

Commenting on the news, Samuel May, a senior wireless equipment analyst at U.S. Bancorp Piper Jaffray, said: "Infrastructure has been dead, but we're starting to see some buzz again. We're seeing that tech overall has a bit of life."

— Gabriel Brown, Research Analyst, Unstrung

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