According to a study being released by Infonetics today, the optical network hardware sector was up some 5% sequentially in the fourth quarter. That jives well with the earnings we have been seeing so far; it is clear that some of that capex that didn't get spent in the prior 4 quarters has begun to trickle back into the market. For the full year, the sector was still down some 14% overall. One interesting tidbit was that most of the changes in market share came at the optical edge from companies like Fujitsu, Adtran, and ADVA - it's an area that is becoming increasingly dynamic.
However, the sector remains volatile according to other Infonetics analysis. Huawei held onto its lead and finished the year at the top of the heap, but Alcatel-Lucent (NYSE:ALU, news, filings) gained some ground in the fourth quarter and seems likely to continue gaining given anticipated reductions from Huawei's large Chinese customers in 2010.
Infonetics also found that carriers continue to slow 40G deployments a bit. Does that imply traffic growth is slowing also, or does it reflect increased interest in commercial 100G deployments over the next few years? Hopefully the latter of course!
But the news is really that spending does seem to have returned for now across the optical equipment sector, and hopefully it will stay for the rest of 2010 as well. That will ease pressure on just make everyone a bit less worried about the next set of layoffs cost reduction initiatives.
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