Earnings Season – Hope to Cheer, Prepare to Cringe?

October 18th, 2009 by · Leave a Comment

Earnings season for telecom and internet infrastructure rolls in this week.  Well, it started last week with a few earlybirds like Nokia but things really get going in the next few days.  What to expect?  The market has been happy lately, hopefully it is foreshadowing numbers that show us emerging from the recession.  However, Octobers with positive expectations scare me so I'm not holding my breath.  At least not for Q3 numbers, which will surely still be weak even if we are seeing some pickup in sales given the usual lag time before they show up in revenues.  As usual, it will be Q4 comments that everyone will be parsing for any signs that this winter won't be so cold.  Now for a few notes previewing those who report this week.

Infinera (NASDAQ:INFN, news, filings), who reports Tuesday after the bell, frequently gives us an early look at the equipment sector, and especially of the second tier of fiber networks that make up most of their revenue.  Infinera's Q2 was up slightly sequentially, and they guided Q3 revenues to a relatively strong $80-82M which seems to be where expectations lie.  I don't sense any surprises there, and I continue to expect caution in their comments going forward.  They will likely provide some interesting color on their new edge product, due to be released at SuperComm this week as well.  Then on Thursday after the bell we get a followup look at the equipment sector from Juniper Networks (NASDAQ:JNPR, news, filings), on whose results there will be many eyes.

Also giving us its quarterly first look, this time of the colocation and datacenter space, Equinix (NASDAQ:EQIX, news, filings) reports on Wednesday afternoon.  The company has been amongst the strongest performers in this recession, last quarter they beat estimates and raised guidance.  Equinix enjoys the position of generating enough of its own cash to keep investing when others have had trouble accessing the credit markets.  On the other hand, their revenue stream is highly predictable and it would take a really powerful quarter to see them beat those raised projections.

AT&T (NYSE:T, news, filings) will give us its iPhone report on Thursday morning, and probably use the occasion to praise itself for acquiescing to network neutrality even on its wireless network.  Of course, they'll also tell us how the rest of their business is going, but we will have to read a few paragraphs down in the news summaries to find that part.  Key for the sector, however, will be their comments about capex going forward.

In other reports on Thursday, the results of Colt Group (LON:COLT, news) will give us a pure perspective on European telecom and data but I doubt they will surprise anyone.  And Netflix (NASDAQ:NFLX, news, filings) is always exciting, though results themselves aren't likely to be any more interesting than usual.  Netflix ought to be amongst the most positively affected by the FCC's moves on network neutrality, in that the threat by last mile providers to filter them out seems to be receding.  But the market may have factored that in already, and the next battle, of course, will be usage caps.

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Categories: Financials

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