Viavi CEO: The telecom market is finally starting to look better

Viavi CEO Oleg Khaykin is not one to mince words.

For example, in May he said that "money talks and bullshit walks." He was responding to a question on whether telecom network operators would start spending again in 2025. Broadly, his message at the time was that "the conservative spend environment" would persist throughout this year.

Now, as 2024 begins to wind down, he has a different message: "There are signs of stabilization and improved momentum, leading to demand recovery starting in the December quarter and continuing into the second half of fiscal '25," he said this week, according to Seeking Alpha. "In addition, we're also seeing stabilization in our wireless business and expect it to start recovering in the second half of fiscal '25, which is earlier than previously anticipated."

Khaykin said that for more than a year, network operators have been in a "Mexican standoff," with each signaling to others that they don't plan to invest much into their networks. But he pointed to renewed spending by Verizon and AT&T as indications that things have started to change.

Importantly, Khaykin suggested telecom's spending recovery appears to stretch across cable, wireless and fiber.

Viavi sells network testing and measurement gear, and is therefore often seen as a bellwether for overall demand for telecom equipment.

Other companies – from Ericsson to SBA Communications – have offered a similar positive outlook.

Despite Khaykin's mostly positive tone, the financial analysts at B. Riley Securities aren't quite ready to cheer. "And at this point, there is no hard data suggesting it will be a strong recovery. As such, we continue to be on the sidelines," they wrote in a note to investors following the release of Viavi's quarterly earnings.

In its quarterly report, Viavi recorded revenue of $238.2 million, down 3.9% year-over-year. But Viavi's forecast for its coming quarter – of revenues between $255 million and $265 million – were above most analysts' expectations. The company's stock popped to around $10 per share on its guidance.