An Oct. 26 earnings report by Tellabs is the latest sign that the worst of the telecom spending slump may be ending. The seller of products that can boost network bandwidth said third-quarter revenue rose 1 percent from the previous quarter, the second straight period of sequential growth. Tellabs executives said the company may see added growth in the period that ends in December.
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Tellabs has yet to start growing from last year — third-quarter revenue was 8.3 percent lower than a year earlier — but its report provided further evidence that the telecom gear market may be bottoming out. The industry went into a tailspin last year, when enterprises slashed spending on networks and phone and cable providers curtailed investment in systems that deliver phone and other communications services.
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There are other signs of a rebound. On Oct. 22, Juniper Networks, a maker of networking equipment, said third-quarter sales rose 5 percent from the previous period. Two days earlier, Infinera, which makes equipment used in fiber-optic networks in metro areas, reported a 21 percent sequential sales increase and a 3 percent gain from a year earlier. It looks like the first half of this year was the bottom, Infinera CEO Jagdeep Singh says in an interview. It looks like we are in the early stages of a recovery.
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Second-half carrier spending on wireless and wireline equipment may rise 4 percent to 8 percent from the first half as carriers try to improve their networks after delaying some upgrades, according to consultant IDC. We may be turning around, says David Emberley, an IDC research manager. Government stimulus packages aimed at improving broadband access in the U.S. and other countries may spur demand as well.
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Fear of a Double-Dip Recession
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The U.S. government has earmarked about $7 billion in broadband spending so far, and Federal Communications…