Revenues for the optical networking systems segment retreated year-on-year for the third consecutive quarter in 3Q12, asserts market research firm Ovum. And optical transmission vendors shouldn¡¯t count on the usual fourth quarter spending spree to make things right, add Ovum analysts.
Weak macro-economic factors, particularly in Europe, have carriers leery about spending money to keep up with the continuing rise in bandwidth demands. These operators are ¡°running networks hotter¡± in an effort to save money, Ovum analysts say.
¡°Preliminary analysis of 3Q12 results offers little positive news,¡± explains Ron Kline, principal analyst, network infrastructure at Ovum. ¡°The competitive environment is challenging at the moment. Many vendors are grateful just to see their business stay flat. It will be very difficult for the market to reach the 2% growth we have predicted for the year. Now is the time to position next-generation products with operators which will have no choice but to turn spending back on in 2013.¡±
Ovum expects sales to pick up at least a bit in the final quarter of this year ¨C but vendors who have suffered so far this year shouldn¡¯t expect to get healthy all at once.
¡°With three uninspiring quarters of 2012 behind us, we are advising our clients that the global market will likely contract into the $14.5¨C15.0 billion range, a further retrenchment from our 2Q alert guidance. A modest ¡®budget flush¡¯ factor is included in our revised estimate, but we are not anticipating a large-scale buying spree that would recoup all the ground lost in the three earlier soft quarters,¡± concludes Kline.
Additionally, the market research firm expects the global economy to continue to be weak into 2013.
Sales in 3Q12 dropped 8% year-on-year in EMEA, Ovum reports. North American spending slipped 11%. South and Central America spending also declined 4% over the same quarter in 2011. The combined shortfall was enough to offset a 14% year-on-year increase in Asia-Pacific spending, leading the overall optical network systems sector to decline 1% compared with 3Q11 to $3.7 billion.
Four vendors Ericsson, Fiberhome, Huawei, and NEC ¨C escaped the 3Q12 carnage and reported both sequential and year-over-year revenue growth. However, Nokia Siemens Networks, Tellabs, and ZTE suffered sequential and year-over-year revenue declines. Meanwhile, Alcatel-Lucent¡¯s saw its quarterly revenues slip below $400 million for the first time and its rolling revenues fall below $2 billion, which Ovum asserts is an all-time low.