Spirent saw its share price slump by 19% after it warned that "soft" market conditions would result in worse-than-anticipated financials for the second half of this year.
The test systems specialist issued a trading statement to say that "demand levels dipped sharply as a result of merger activity and delays in capital expenditure as future new technology deployments are being assessed in areas in which Spirent has increased its investments." It noted that its business in the US and China has been particularly affected. (See Spirent Puts 400GigE to the Test and Spirent Unveils Virtual Test Bed for SDN, NFV .)
The news came as a surprise, as Spirent Communications plc had reported a 16% increase in revenues for the first half of the year to $221 million, and with a number of portfolio-enhancing acquisitions under its belt, had expected that momentum to continue for the rest of 2014. (See Spirent Acquires Mobilethink, Spirent Spends $25M on Radvision VoLTE Unit and Spirent Buys CEM Specialist.)
Now Spirent expects third-quarter revenues to be about $110 million, only slightly higher than the same period a year ago, while fourth-quarter revenues are set to be in the range of $120 million to $125 million, again slightly better than in 2013. The company's operating profits "will be impacted" by the lower-than-expected revenues, it noted.
Investors didn't like the news, as Spirent's share price slumped by 19% to 80 pence on the London Stock Exchange.
— Ray Le Maistre, , Editor-in-Chief, Light Reading