Wireless backhaul products developer Ceragon will report results this Friday. As the company already warned at the end of March that quarterly sales will be around $44 million, and earnings per share will be around $0.03, investors will react primarily to future guidance, if it is provided.
I believe that for Ceragon, as with other firms in its industry who have already reported, the first quarter marked the bottom of the current recession. There are signs that investments in cellular infrastructure in the US are beginning to awaken, and Ceragon recently was able to recruit a new manager from a competitor. Jayne Leighton, with much experience in marketing to cellular companies, is now president of US unit Ceragon Networks Inc.
The relay of information over networks due to Apple’s iPhone and its competitors is forcing communications companies to invest in the type of equipment supplied by Ceragon, because existing network infrastructure is old, and part of it is near the point at which it will not be able to handle the huge flow of video that is streaming across networks.
I imagine that executives at cellular networks in the US and around the world were worried that their networks would collapse when millions of people passed around the clip of Susan Boyle over their mobile devices.
At the GSMA Mobile World Congress in Barcelona this past February, Verizon (NYSE: VZ) announced an accelerated plan to set up a new cellular network based on LTE technology. These are investments worth billions of dollars over the next two years, including building and updating thousands of communications towers with advanced wireless equipment, of the type that Ceragon makes, to communicate between the towers and central locations. According to market rumors, Ceragon is on Verizon’s list of suppliers.
In India, too, where Ceragon has a major presence primarily through OEM agreements with Nokia-Siemens Networks, there are signs of a thawing of contracts for investment in cellular infrastructure. In recent days, it was reported that in March alone over 16 million new cellular subscribers joined in India, and there are slightly less than 400 million subscribers out of a population of 1.2 billion.
A country with a cellular sector growth rate as fast as India’s cannot allow itself to freeze infrastructure contracts for too long, no matter how deep the recession is, because for the millions of new subscribers each month, they must continue to set up thousands of communications towers.
Published by Globes [online], Israel business news - www.globes-online.com - on April 29, 2009
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