© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Spirent Communications saw its shares lose as much as 17 per cent of their value on Thursday after warning that Chinese and European telecoms companies were slowing down the rate at which they were buying testing equipment from the UK-based company. Spirent makes machines and probes to test mobile handsets and check that networks are running as they should.
As the industry adopts more complicated smartphones and builds more high-speed networks, Spirent should in the long term sell more equipment at higher prices. In the short term, however, it is being hit by the same slowdown that a number of other technology companies from Intel to Cisco have noted over the past few weeks, with large customers reining back orders. Spirent is calling this a mere “speed bump” but investors are worried about lack of visibility on just how long the slowdown might prove to be.
Revenues grew 10 per cent at Spirent last year, but this year growth is expected to be only 3 to 5 per cent. Spirent shares had risen more than 60 per cent since December, putting them at a premium to the rest of the sector. Thursday’s fall leaves the stock trading at around 16 times this year’s projected earnings, which is more in line with its peers.
|Year to July 1||% change|
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in