Spirent Eyes Wireless, New CEO
The company generated revenues of £120.5 million ($235 million), up 6 percent compared with the first six months of 2007; reported an operating profit of £21 million ($41 million), up more than 300 percent year-on-year; and announced its first dividend (0.5 pence per share) since 2002.
The improved profitability is largely due to the company's cost-cutting program, which is now complete and delivering annualized savings of £31.7 million ($61.9 million). (See Spirent on the Mend? and Spirent Cuts Deeper, Sticks With OSS.)
The company's share price edged up 2.75 pence, about 4.5 percent, to 63.75 pence on the London Stock Exchange Tuesday.
Most of the first half-year's revenues (about 73 percent) and operating profits (87 percent) came from Spirent's performance analysis division, which sells lab-based test tools to equipment vendors and carriers.
The service assurance division, which sells service monitoring systems and probes that carriers install in their networks, delivered 13 percent of the revenues and 11 percent of the operating profit.
Spirent has been working hard to add new capabilities to its popular TestCenter product and tackle video test challenges as vendors and operators shift towards higher-capacity data platforms. TestCenter sales are up 30 percent compared with last year. (See Spirent Touts TestCenter, Spirent Unveils IPTV Testers, Spirent Gets PBT Thumbs-Up, and Spirent Tests Home Networks.)
And the service assurance division has finally found another taker, in addition to Canada's Telus Corp. (NYSE: TU; Toronto: T), for its triple play service probe, though the unidentified major U.S. broadband service provider customer is only using Spirent's technology to monitor its DSL performance at present. (See Spirent Wins at Telus.)
But it's the mobile market that starred during the company's earnings conference call today.
Spirent noted a "particularly strong performance in wireless test systems" (air interface and device-test platforms) at its Performance Analysis division during the period. It intends to capitalize on that strength in the coming years as handset vendors and equipment manufacturers develop their next-generation platforms based on technologies such as Long Term Evolution (LTE), WiMax, and CDMA EV-DO Revision A. (See Spirent Adds WiMax, Spirent Tests EV-DO Rev A, and Spirent Tests MediaFlo.)
Much of Spirent's wireless business comes from the CDMA community at present. Executive chairman Ed Bramson told analysts on today's call that the company sees a clear opportunity to benefit from its current customer base as new cellular technologies, particularly LTE, are introduced and coexist alongside CDMA and UMTS deployments.
And the man likely to lead Spirent as it develops products to chase that opportunity is Bill Burns, currently CEO of Spirent's Communications Group (comprising performance analysis and service assurance). Bramson, who has been running Spirent since he ousted the previous CEO in March 2007, intends to separate the chairman and CEO roles during the second half of the year, and noted that there is a "proven internal candidate" who has "experience of service assurance, wireless, and broadband, and he's with us in the room today." (See Spirent Spikes CEO .)
Burns, who (luckily for him) was indeed in the same room, has been primed for the role since he was promoted early this year. Burns fought off a challenge from then-COO Rob Piconi, who subsequently left the test vendor. (See Piconi Parts With Spirent.)
— Ray Le Maistre, International News Editor, Light Reading