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Intel and telcos left in virtual RAN limbo by rise of AI RAN
A multitude of general-purpose and specialist silicon options now confronts the world's 5G community, while Intel's future in telecom remains uncertain.
Ericsson, Adtran and Netscout all warned of sluggish quarterly sales that could continue into next year. Cambium Networks, Spirent and A10 Networks recently issued similar advisories. As a result, additional job cuts are likely.
Another group of telecom vendors sounded the alarm over falling demand among their network operator customers. Specifically, Ericsson, Adtran and Netscout all warned of sluggish quarterly sales that could continue into next year.
The warnings build on similar ones recently from Cambium Networks, Spirent and A10 Networks.
Further, it's likely the number of layoffs in the telecom industry will increase as a result. Already companies ranging from Airspan to Juniper Networks to Crown Castle to Qualcomm have shed staff in order to align their operations with sluggish demand for their products. The companies that issued warnings today hinted at similar plans.
"We will continue to focus on aligning our operating model to reflect the current environment," Adtran CEO Tom Stanton said in a statement.
"We have begun to take several actions to manage discretionary costs and align spending with the current environment," echoed Anil Singhal, Netscout's CEO, in a statement of his own.
There are clear reasons why telecom network operators in general – and 5G operators in North America specifically – have slowed their investments into their networks, according to the financial analysts at KeyBanc Capital Markets.
"Wireless carriers' 5G deployments have progressed without new applications, arguing for a pause," they wrote in a recent research note.
The numbers
Adtran said its revenue in the third quarter ought to be around $272.3 million, down from its previous guidance range of $275 million to $305 million. "Total customer count continued to grow in the third quarter of 2023," the company wrote in a statement. "However, management believes that customers will manage their inventories conservatively and adjust their capital expenditure budgets in the fourth quarter in response to the changed economic environment."
Adtran, a fiber networking company, is scheduled to release its full quarterly results next month.
Similarly, network-monitoring company Netscout lowered its revenue expectations for the year to between $840 million and $860 million. That's down from its prior outlook range of $915 million to $945 million.
"We recently began to experience a slowing in demand flow-through as customers implemented higher spending scrutiny and delayed project funding. We attribute this primarily to two factors: (1) the widely publicized capital spending pressures facing the service provider industry, which Netscout had been relatively insulated from until recently; and (2) the challenging macroeconomic environment facing our customers that has created sub-pockets of softness across multiple enterprise sectors," Singhal, the company's CEO, said in a statement.
Netscout is scheduled to release its full quarterly results next month.
And Ericsson this week released its full quarterly results after hinting at some possible softness last week. The company's earnings report sent its shares tanking. "We don't believe the peak levels of 2022 will return but we do believe that investments will normalize from current levels," CEO Börje Ekholm told analysts.
"Let's be careful out there," summarized James Crawshaw, a principal analyst with Omdia (a Light Reading sister company), in a social media post.
A gamble
News this week wasn't uniformly crummy. For example, Verizon announced it would hire an additional 1,800 technicians to "focus on building, maintaining and installing Fios home Internet" across the East Coast. However, those hires won't do much to stop Verizon's shriveling workforce. As Light Reading previously reported, the company's headcount declined steadily from 144,500 in 2018 to 117,000 in 2022.
A company official confirmed to Light Reading that its new hiring push is intended to support Verizon's existing geographic fiber footprint rather than any expansion. "However this will help support our rural broadband buildout within that footprint," Verizon's Ilya Hemlin wrote in response to questions from Light Reading.
In other news, Apple may be seeing some successes in the US market with its latest iPhone, released just a few weeks ago. According to Counterpoint Research, Apple is seeing double-digit increases in sales of its iPhone 15 in the US when compared with last year's iPhone 14.
"The US is hot right now with back-to-back stellar weekends for the new iPhone. Overall reception of the 15 series has been very positive and we're expecting a major upgrade cycle from iPhone 11 and 12 users," analyst Jeff Fieldhack said in a Counterpoint release.
But the firm warned that Apple's sales in China are down compared with last year.
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