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Good News for Telco Equipment Makers
It looks like the days of sharp reductions in capital spending by North American carriers could be a thing of the past. According to a new report by Infonetics Research, capex is expected to only drop 2% this year to about US$47.2-billion. This compares with a 22% decline in 2003 from 2002. As important, it appears the capex-to-revenue ratio has levelled off at about 14%. If you are Nortel, Lucent, Ciena, etc., this has to be the best news you've heard in a long time. It's also a positive signal for Nortel, which has been so engulfed in accounting issues that many investors fail to realize it is poised to capitalize on the equipment market's rebound.