x
Packet core

The Huawei Equation

4:30 PM -- Huawei Technologies Co. Ltd. 's reputation as a cut-price vendor has had a negative knock-on effect on one of its rivals this week.

Last week we reported how the Chinese vendor had won a significant European mobile packet core deal at T-Mobile International AG . (See Huawei's Core Euro Breakthrough.)

While Nortel Networks Ltd. took a hit from that deal -- it was the incumbent in the five markets where Huawei is now being deployed -- mobile data infrastructure vendor Starent Networks Corp. (Nasdaq: STAR) also took a kicking.

That's because analysts at JP.MorganChase downgraded Starent's stock to Neutral from Overweight following Huawei's win because, not only did Starent not win at T-Mobile, but Huawei's success could undermine the mobile packet core sector's pricing and hit Starent's margins.

The result? Starent's share price got slammed by 22.4 percent Tuesday, dropping from Monday's closing price of $22.88 to $17.75 by the close of play.

Starent clearly hit the phones today (Wednesday), because its stock has regained some ground -- it's up $0.75, more than 4 percent, to $18.50.

That rise, though, will be scant consolation for the investors who bought into Starent's new stock issue of 3.88 million shares at $24 apiece on November 6. Right now, the $30-plus heights hit in October will seem like a long way off.

Starent, which has more than 60 mobile operator customers and recently won a new deal in Mexico, joined Nasdaq in June. (See Iusacell Deploys Starent and Starent Leaps on Debut.)

— Ray Le Maistre, International News Editor, Light Reading

Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE