Test & Measurement

Spirent Keeps Cool

4:00 PM -- Test system vendor Spirent Communications plc was sounding pretty pleased with life today as it reported its 2008 results, which showed a 9 percent increase in revenues to £258 million (US$374 million) and a 179 percent hike in profit before taxes to £49.6 million ($71.9 million). (See Spirent Reports 2008.)

Spirent's share price closed Tuesday up more than 12 percent at 41.5 pence.

What appeared to please investors was the company's decision to pay a dividend, of 1.1 pence per share, and the announcement that it's cutting costs further to keep its margins healthy.

Spirent's board has initiated a drastic overhaul of the company in the past two years that has seen the company slimmed down and turned around in terms of profitability and product focus. (See Spirent on the Mend?)

So despite its encouraging 2008, the company, noting that "major customers view 2009 as a year of decreased activity," has found even more cost cuts, which will slice £8.2 million ($11.9 million) off the annual expenditure line.

But with activity increasing in two of Spirent's key focus areas -- carrier Ethernet and next-generation wireless (3G and LTE) -- will further cost cuts impact product development at what could be a crucial time? (See Spirent Tests Ethernet Interop, Spirent Bolsters TestCenter, Spirent Tests LTE, and Spirent Eyes Wireless, New CEO.)

Spirent says the cuts are focused on "improving efficiencies in manufacturing and design, as well as use of outsourcing," in addition to a headcount reduction of about 5 percent of its staff, or about 60 jobs. The company notes that it still spends about 18 percent of its revenues on R&D.

— Ray Le Maistre, International News Editor, Light Reading

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