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Test & Measurement

Spirent on the Mend?

Spirent Communications plc appears to have turned its ship around.

The test systems vendor, which has been under new board-level stewardship for about the past 16 months, has spent the past few years cutting costs and revamping its operations. (See Spirent Cuts Deeper, Sticks With OSS, M&A Disrupts Spirent's Order Book, and Spirent Suffers Boardroom Coup .)

Now it has a new CEO (Bill Burns) and a well known platform that's popular with major equipment manufacturers (Testcenter), is targeting hot growth segments such as IPTV, carrier Ethernet, and WiMax, and, according to numbers released yesterday, is benefiting from its operational overhaul. (See Spirent Gets PBT Thumbs-Up, Spirent Unveils IPTV Testers, Piconi Parts With Spirent.)

In the first quarter of this year, Spirent generated revenues of £59 million (US$115 million), about 8.5 percent better than a year earlier, and profits of £9.4 million ($18.3 million), compared with a near break-even position a year earlier. (See Spirent Unveils Q1 Prelims.)

The majority of its revenues (73 percent) and operating profit (82 percent) in the first quarter came from the Performance Analysis division, which develops and supplies lab-based test products (including the multiservice TestCenter platform) to equipment firms, independent testing houses, and carriers.

In a recent interview with Light Reading, CEO Bill Burns noted that the restructuring of the company was not "just about cost saving -– it was about becoming more operationally effective. We have improved our manufacturing processes, we're focused on certain areas, and we're the right size."

Is that the right size to be acquired, maybe?

Burns reiterated previous company statements about potential M&A activity, saying that Spirent is "not looking to sell the business -– it's not in the plan." And while there are no specific plans to make acquisitions, anything at the right price would at least be considered, added the CEO.

Burns also believes the firm's OSS division (Service Assurance), which pulled in about 14 percent of first-quarter revenues and 18 percent of operating profit in the quarter, has some growth potential after a few years of decline and stagnation.

Spirent is aiming to launch new products for in-home triple-play testing, target the triple-play services sector in general, and aim to win a slice of the carrier Ethernet services monitoring market, especially in the emerging Ethernet backhaul sector.

In its first-quarter statement, Spirent notes that April has been a good month for business and has reiterated its "encouraging" outlook for the full year.

From a 12-month low of 50 pence in early February, Spirent's share price has risen about 40 percent to nearly 70 pence, giving it a market capitalization of more than £550 million ($1.07 billion).

— Ray Le Maistre, International News Editor, Light Reading

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