File this under, Silver Lining: Carrier capex budgets are firming, which might translate into improving revenue for Cisco and Juniper for the rest of the year, according to Oppenheimer & Co. In Q2, the firm found that spending among the 33 largest global carriers might be spared further budget cuts for the rest of the year.
Oppenheimer now expects the group’s 2009 capex to decline 4.9% year-over-year vs. 6.5% previously. But the firm also notes that capital spending for the group remains down 14.6% from last year.
What does this mean for Cisco and Juniper? Oppenheimer expects incremental sequential improvement in revenues throughout the year for both companies due to indiciations that capex budget cuts have ended. Quoting from the Oppenheimer bulletin on the capex findings:
Based on our analysis, we believe further CapEx cuts in 2009 are not likely. While the impact on Cisco and Juniper will vary given their regional and carrier-specific exposure, we expect both to show improving revenue trends throughout the year as carrier budgets have firmed, limiting downside risk.
Even so, Oppenheimer says it is “comfortable” with its carrier routing estimates for Cisco and Juniper calling for sales to contract 19.2% and 20.4%, respectively, year-over-year.
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