2013: Good News for ALU, CSCO,CIEN

Telecom infrastructure spending is projected to bounce back in the year ahead, with investment in North America and Asia driving growth. Infonetics Research is projecting worldwide growth of roughly 4%, as even operators that have been delaying investments finally start spending. “Service providers have no choice but to invest in their networks now; some have been restricting capex for so many years that they are experiencing network outages, unable to handle exploding traffic,” said Infonetics analyst Stéphane Téral.

Infonetics projects that carrier spending on every type of telecom equipment except optical and TDM voice will be up in 2013, and that capital expenditures will focus on fiber-based wireline broadband, 2G mobile network capacity expansion, 2G migration to 3G, and migration to LTE projects through 2015.

2012 has been a year that many infrastructure providers “would rather just forget,” said Daryl Raiford, CFO of Genband. “Now everyone is waiting to see what 2013 has in store for us.” Raiford thinks that small cells and small cell backhaul will be a focus for 2013 infrastructure spending, as will semiconductor solutions that can increase bandwidth. Raiford also noted that late last year infrastructure spending was projected to increase about 4% for 2012, but in reality spending turned out to be down.

The outlook brightened last month when AT&T announced Project Velocity IP, a $14 billion investment in network infrastructure planned for the next 3 years. Then Deutsche Telekom said it would invest almost $40 billion over the next 3 years, with much of that investment slated for its T-Mobile USA unit and for MetroPCS, which is merging with T-Mobile USA. Verizon Wireless has not released a dollar amount for its planned investment next year, but has outlined the areas that it will prioritize.

Competitive carriers should also account for a significant portion of capital investment in the year ahead. Infonetics says that in 2012, independent wireless operators bucked the downward trend, increasing their capital expenditures by 12%.

ALU, CSCO, CIEN: Global capital expenditure (capex) by telecommunications service providers is expected to reach $223.3 billion in 2017

Global capital expenditure (capex) by telecommunications service providers is expected to increase at a compounded rate of 1.5% over the next five years, from $207 billion in 2012 to $223.3 billion in 2017, according to a new market report from The Insight Research Corp.

The new study says capex in the various global regions will be uneven, with North America, Europe, and the Latin American-Caribbean regions showing little or no growth and only Asia-Pacific and Africa continuing to make investments in telecommunications hardware and software to keep up with burgeoning customer demand for new services. Capex among fixed-line operators continues to decline, while capex growth comes mainly from mobile operators in developing countries, who continue increasing  their capital outlays to meet pent-up demand for service.

While demand for telecommunications services may be income-inelastic and industry revenues may actually grow over the forecast period, services in every global region will nonetheless come under heavy pricing pressure as operators fight over the cost-conscious customers who are quite willing to delay new device purchases, the market research report says.

"Customers in every region are pinching pennies and the demand for advanced applications is uncertain," says Insight Research President Robert Rosenberg. "The confluence of these trends means a further erosion of operator margins, which in turn will affect investments into infrastructures and new technologies since funding is now more difficult to obtain."

The difficulty in finding funding now faced by many operators will certainly slow down, if not derail, the rolling out of investments in next-generation networks, WiMAX, LTE, and converged services, he warns.

The report, entitled Telecommunications and Capital Investments: Impacts of the Financial Crisis on Worldwide Telecommunications, 2012-2017, provides capital spending forecasts for the U.S., Canada, UK, Germany, France, Japan, China, and India. On a per country basis, capex spending is subdivided according to fixed lines, mobile, and broadband. 

Ciena (CIEN) an investor darling

Despite missing on earnings per share in its fiscal fourth quarter and entering what management describes as “a quarter in which we typically experience seasonal reductions in order volume and customer deployment activity,” shares in Ciena Corp.  rose on Wall Street yesterday.

Analysts speculated that the growth in order backlog may have led investors to conclude that Ciena is in good shape for a hoped-for future turnaround in fiber-optic network equipment spending.

Ciena reported December 13 results for its fiscal fourth quarter, which ended October 31. Revenues of $465.5 million represented a 1.8% sequential decline but a 2.2% improvement over the year-ago quarter. For the recently concluded fiscal year, Ciena reported $1.8 billion in revenue, up from $1.7 billion for fiscal 2011.

GAAP net loss for the recently concluded quarter was $38.8 million ($0.39 per common share), worse than the GAAP net loss of $22.3 million ($0.23 per common share) suffered in the year-ago fourth quarter. For the fiscal year 2012, Ciena reported a GAAP net loss of $144.0 million ($1.45 per common share) versus a GAAP net loss of $195.5 million ($2.04 per common share) for fiscal year 2011.

“With five percent annual revenue growth and fourth quarter financial performance in line with our expectations, we continued to significantly outpace the market and take share in 2012 despite the challenging environment. That momentum resulted in record order flow and year-end backlog,” said Gary Smith, president and CEO of Ciena, via a press release. “Customers require more network convergence with greater programmability to deliver more services, and we believe our portfolio is leading the transformation to next-generation intelligent networks.”

Investors appeared to buy the story, despite the fact that Ciena guided revenues for the first quarter of fiscal 2013 at $435 to $460 million, with adjusted (non-GAAP) gross margin percentage in the low 40s and non-GAAP operating expense in the high $180s million range. Shares of the company’s stock closed yesterday at $15.80, up from the previous day’s $15.57 on a volume of 15,671,698.

Investor enthusiasm for the stock left several analysts puzzled. “A record $2 billion of orders in FY12 and 25% backlog increase to $900 million along with hope regarding a capital spending cycle seems to have fueled investor optimism,” wrote Raymond James analyst Simon Leopold in a note to investors by way of example. “We note that FY11 ended on a similarly upbeat note with backlog rising ~20%, yet FY12 fell short of expectations.

“The intraday rise in Ciena's shares surprises us and appears as a hope trade (i.e., belief that it generates significant growth and margin improvement eventually),” continued Leopold, who has Ciena’s stock rated as “Market Perform.” “Ciena's return to profitability and achievement of its long term 10% to 12% operating margin target slide out in time again. We remain optimistic regarding demand, but we're surprised and disappointed by the higher expense and lower margin outlook.” 

Weakness in both packet-optical transport and packet-optical switching led to the sequential revenue decline in the fiscal fourth quarter. Packet-optical transport sales shrank $9.1 million sequentially, while packet-optical switching revenue retreated by $17.3 million

EU Summit: Buying time till next crisis?

Review of the consequences of the European summit last week, in which the leaders agreed on a series of measures in an attempt to curb the debt crisis in Europe, noting that although the solutions proposed at the conference - the major problems on the continent remain. 

Europe has a very great debt, and will continue to deal with the need to reduce debt over time; the weekend program primarily buys them time until the next crisis.

The point of light is that the first time we see confirmation of EU leaders, despite the determined opposition of Germany till to date, to use funds extraction, to support the markets.

This is a very significant step in this respect, and there is a positive surprise to markets , since the results are good expectations. Short term, therefore, it is likely that markets will continue to respond positively to this change. "

However, in the end that decisions made at the weekend did not include a commitment to mutuality, it opposes Germany: "there is no consensus on the Euro - Bonds, there is no consensus on the guarantee of the public's deposits in banks, and there is no agreement on the establishment of the debt Redemption Fund, in order to consolidate the debts of countries (those above the 60% debt to GDP ratio) and to spread the payment for them a long time.

In addition, no details as outline the execution of various processes:

* From where will come the money to help banks that need it?

* From where will come the money to purchase bonds of countries if we even get there?With many efforts to fix Europe crisis, last 2 weeks Market behavior was very hard to forecast,

 I did it by the help of some stock forecast methods for Short/Medium/Long term.

Below are links to the articles on the issue:

http://seekingalpha.com/article/693861-forecast-the-markets-are-still-predictable

http://seekingalpha.com/article/678611-taking-the-market-out-of-the-market?v=1340446023&source=tracking_notify

IMO we are going to have GREEN S&P500 next week.

AAPL: Time to sell your used iPAD 2?

Prices for the iPad 2 will fall as the official launch date for the iPad 3 — widely expected to be March 7 — edges closer, experts say. Consumers can expect to see a steep decline in value in the two to three weeks prior to the unveiling of the newer device, says Mark LoCastro, spokesman for sale aggregator site DealNews.com. “You’ll receive a higher resale value for your used device if you part with it now, rather than waiting for the newer generation to be announced,” he says.

The re-sale price follows the same trajectory as the iPhone, experts say. As SmartMoney.com reported, the iPhone 4 declined 20% to 25% in value on re-sale sites during the immediate launch period of the iPhone 4S, but this leveled out as the excitement over the launch subsided. The iPad 2 will likely experience a similar percentage decline after the iPad 3 is announced, says Ashley Halberstadt, a spokeswoman for re-sale site Nextworth.com. That said, LoCastro says re-sale sites want to offer aggressive pricing now in order to buy up as many units as possible while people are looking to sell — so he doesn’t rule out an uptick in price on the day the iPad 3 is announced.

However, if Apple decides to continue selling the iPad 2 at a discount alongside the spanking new iPad 3, the re-sale market for old tablets will experience an even bigger hit, LoCastro says. “This is just a rumor and many are skeptical, but if it proves true the trade-in value for your used iPad 2 will immediately plummet,” he says. (Apple did not respond to requests for comment.) That said, the value of Wi-Fi only iPads typically hold up better on the re-sale market because they don’t involve buyers taking out a two-year data plan, Halberstadt says.

AAPL: Is iPhone 4S smartphone enemy of iPad ?

It is hard to argue with the statistics.

As an example of having yourself as your enemy, Apple Inc.'s own products have eaten away at each other's market shares. Case in point: it was not Kindle Fire or any other tablet but the iPhone 4S that has proven to be the strongest competitor for the iPad during the final three months of last year, according to IHS Inc. 

The company shipped 15.4 million iPads and iPad 2 in 4Q11. But while shipments were up 39 percent from 11.1 million in the Q3, Apple's share of the global media tablet market slipped to 57 percent in Q4, down from 64 percent Q3, added the market research firm.

"Shipments of the iPad line fell short of IHS estimates in Q4 as many loyal Apple customers devoted their dollars to shiny new alternatives," stated Rhoda Alexander, senior manager, tablet and monitor research for IHS. "However, the primary alternative wasn't the Kindle Fire—which debuted to solid sales in the fourth quarter—but Apple's own iPhone 4S smartphone. The rollout of the iPhone 4S in October generated intense competition for Apple purchasers' disposable income, doing more to limit iPad shipment growth than competition from the Kindle Fire and other media tablets."

The debut performance of the Kindle Fire played a strong role in the share shift as well, particularly in the U.S. market, which accounted for more than half of global Q4 media tablet sales. Amazon shipped 3.9 million Fire tablets in Q4, allowing the company to garner a double-digit share of the market, at 14.3 percent. This drove Amazon to become the world's second-largest tablet shipper in Q4, surpassing Samsung Electronics.

For the entire 2011, Apple shipped 40.5 million iPads and iPad 2, up 168 percent from 15.1 million in 2010. This gave the company a 62 percent share for the year, down from the dominant 87 percent in 2010, when Apple had the media tablet market all to itself for most of the year.

Despite Amazon's strong showing at the end of the year, Samsung held on to second place, with shipments of its Galaxy Tab line amounting to 6.1 million units, or 9.4 percent of the 2011 market. Amazon's share for the year amounted to six percent.

The fourth-quarter introduction of value-priced tablets, most notably the Kindle Fire and Barnes & Noble's Nook, created chaos across the Android tablet marketplace, forcing competitors to slash pricing in order to clear inventory. "The surge in non-iPad shipments in Q4 was achieved at considerable financial cost, with sharp price reductions across most of the competing Android tablets and actual product giveaways from a number of vendors as part of promotional efforts for other electronic products," Alexander said.

In the wake of the new low bar for pricing set by the Fire and the Nook and the looming Google acquisition of Motorola Mobility, manufacturers and branded vendors are looking to Windows 8 tablets as a more profitable alternative, seen to arrive late this year or early next year.

Apple is set to reclaim its tablet market share when it resumes volume shipments of the next version of the iPad that is expected in 2Q12. IHS anticipates strong sales for the iPad 3, with demand expected to outstrip supply for several months. The new device is reported to feature a QXGA retina display with a pixel format of 2,048 by 1,536, as well as Siri, the voice interface of the iPhone 4S. As with previous iPad releases, Apple is anticipated to stage a staggered rollout, introducing the new product in different countries around the globe as supply improves.

As a final statement, year-end media tablet shipments came in at 65.2 million units, slightly above the IHS forecast of 64.7 million units.

It is well known industry phenom-en of Cannibalization of  an old product by new one, that is why good NPI planning including its influence on current products sales is needed from Marketing product definition stage.

AAPL : Q1/2012 Massive numbers and History of the $400B barrier

Apple does it again: Surprised Wall Street yesterday, when AAPL presented a jump of more than 100% increase in profit and revenue line is equally impressive - as part of its financial fourth quarter of 2011. In light of the results, the company's stock was sent to an 8% rise in late trading on Wall Street - as it reaches a new all-time peak.

"Into 2012, I expect the strengthening of the iPhone, iPod - Touch and the iPad. Apple has more possibilities to exploit opportunities, including opening new retail stores and the expansion of additional channels", refers to Henry Sosnto, an analyst at Gabelli & Co for optimism in the report.  "I'd say AAPL have more opportunities in emerging markets, and is still very far from exhausting all the tasks which it can expand," he added. What to do with the money?

And  what enthusiasm? Apple reported a 73% jump in revenues to -46.33 billion, and net income of 13.1 billion (or 13.87 dollars per share) - a jump of more than 100% over same quarter last year.

The company introduces more cash flow of approximately -97.6 billion, which many on Wall Street wondering whether the company will use a distribution of a dividend or repurchase (buy-back) of some of its shares. Apple's CFO, Peter Oppenheimer, declined to address the issue directly to the conference call with analysts after the release of reports.

"While many believe that Apple will repurchase extensive, we estimate that less thought," notes Michael Ioshikami, CEO of YCMNET. "More likely Apple will pay grant one - time, rather than continuing dividend to shareholders."

As for individual sales of its flagship products, Apple surprised yesterday when he reported a 128% increase in sales of iPhones (about 37 million units total). Despite the strength in sales, many wonder if the company has nowhere to go - after such a successful quarter.

"Beautiful things will happen to Apple later this year too," says Michael Blackie, an analyst at Canaccord Genuity. "The company is still expanding geographically and trying to market the iPhone 4 in China, and only started selling it in January. This means that it will be reflected in its results in March next."

Those are good news, let us check what we can learn from the history of  companies reached $400B barrier:

Microsoft (MSFT) was the largest public corporation in 2000, with market cap of $586B. Today Microsoft is worth $250B.

General Electric (GE) replaced Microsoft as the largest public corporation, with market cap of $477B. Today the company is worth $202B.

Intel (INTC) market cap reached $424B in 2000 compared to $134B today.

APPLE (AAPL) market cap today $420B, the stock increased in value over 300% in the last three years.

Is it sustainable?

I don't know.

P.S: Apple is a Great Company but I expressed some of  my doubts in the past.

2012: Great forecast for Alcatel Lucent (ALU), Cisco (CSCO) , Juniper Networks (JNPR), Siemens (SI) , Ericsson ( ERIC)

Lightwave magazine published today,  Optical industry trends for 2012.

Explosive Bandwidth Growth will continue in 2012 at least on 2011 rate, as both wired and wireless networks were  stretched  as consumers continued to adopt intensive bandwidth consuming  technologies at fast pace.

The Lightwave article is in a good agreement with our article from October 25, 2011 regarding Broadband Equipment Market Grow by 40% till 2015.

                 Optical supply chain for telecommunications becomes more on-demand supply chain model, with widespread adoption of vendor managed inventory (VMI) methods or other demand-pull systems.The main challenge for carriers and network equipment manufacturers (NEMs) has not been the recent growth in bandwidth demand itself, but the fact that the growth has come in fits and spurts – making forecasting unpredictable at best. As a result, many in the optics industry have begun to adopt an on-demand supply chain model, with widespread adoption of vendor managed inventory (VMI) methods or other demand-pull systems. 

                  Carriers become aware of self-aware networks

Many consumers are not willing to pay more for services, even though they use more bandwidth every year. As a result, carriers must operate their networks more efficiently. One of the best ways to accomplish this goal is to more proactively manage bandwidth provisioning in the optical domain. This is why “self-aware” networks gained the attention of most operators in 2011 and why they represent a major evolution in transport network design. In these new networks, optical wavelength connections will be dynamically created, re-routed, or removed according to local network bandwidth needs. Self-aware capabilities will drastically reduce overall network operating costs for the carrier.While self-aware networks were still in development in 2011, first deployments could start in late 2012 or early 2013. Operators now know what a self-aware network looks like, what it can do, and what it will cost. This coming year will see operators deciding how to best integrate the technology into their next-generation networks and selecting their preferred equipment for full commercial deployment in 2013. 

        40G reaches mainstream, with 100G close behind

In 2011, 40G deployments continued at a rapid pace with strong demand from China and EMEA. The main driver in China was the need for greater overall Internet speeds, while EMEA’s demand was driven by rising sales of tablets and smartphones. A lot of NEMs are talking about 100G, but 40G is now being deployed all over the world and will continue to play an important role in networks once 100G is readily available. The short-distance market has been figured out and could see initial deployments in late 2012. But the long-haul market is still unclear. 

              Tunable networks now the norm

The entire industry is seeking components that are smaller in size, consume less power, and provide improved functionality, while simultaneously supporting the continued aggressive price reduction trends in the telecommunications equipment market. With this in mind, it is no wonder that the tunable XFP transceiver saw rapid deployment in 2011. At this point, the tunable XFP has all but replaced the 300-pin transponder, and we will see continued growth for the tunable XFP throughout 2012.

Ciena Corp. (NASDAQ: CIEN) strengthens its positions in UK Telecom Market.

In addition to the wins in BT and AAPT in Carrier Ethernet platforms Tenders

Ciena Corp. (NASDAQ: CIEN) says that Ethernet aggregator Vaioni has selected equipment from its Carrier Ethernet portfolio to bring enhanced Ethernet service offerings to enterprises, carriers, and cloud providers. Vaioni is an independent provider of next-generation Ethernet services, VPLS, and private WAN services across the UK

Ciena’s Carrier Ethernet Service Delivery (CESD) portfolio has been rolled out across Vaioni’s UK network infrastructure, enabling the operator to extend the reach of its core network connectivity in its home market, deliver a full suite of next-generation Ethernet services, and maximize service availability while reducing the cost and complexity of turning up new services

After a detailed analysis and evaluation, Vaioni has chosen to standardize on Ciena’s Carrier Ethernet Service Delivery portfolio for all network infrastructure equipment across its UK network, Ciena asserts. The deployment of Ciena CESD equipment is now complete - including a 100% swap of old equipment.

Vaioni selected Ciena’s 3916, 3920, and 3930 Service Delivery Switches, as well as its 5150 Service Aggregation Switch, to build a next-generation Ethernet access and aggregation architecture capable of delivering a full suite of Ethernet services (E-Line, E-LAN, E-Tree) to the wholesale carrier and enterprise markets.

The 3916 and 3920 platforms serve as customer demarcation devices, ensuring quality of service (QoS) required to correctly handle multiple customer applications.

Ciena’s 3930 and 5150 platforms are being used to deploy 10-Gbps fiber-optic rings in key metro areas across the UK. The platforms use G.8032 Ethernet Ring Protection Switching to maximize service availability on the network. 

Ciena compliance to G.8032 is a big advantage over competitors.