Profits Slide 70% at Spirent Communications

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LONDON -- The shares of Spirent  declined 1% to 129 pence during early London trade this morning after the FTSE 250 mid-cap revealed first-quarter profits had plunged 70% to $7.6 million.

Spirent, which provides performance-testing services for the telecoms industry, confirmed revenues had slumped 18% to $97 million. The company blamed the decline on "challenging trading conditions" and a smaller order book at the start of the year.

Spirent said it expected revenues for the second quarter and full-year 2013 to be roughly the same as last year. The company maintained it would increase investment by as much as $14 million during 2013, to exploit opportunities in new technologies such as 4G and cyber security.


Chief executive Bill Burns commented:

Trading during the first quarter was more challenging than anticipated, yet the fundamental drivers of Spirent's business remain positive as investment in the telecom and IT industries will continue to be made on a large scale.

Market conditions are likely to constrain growth prospects in the short term, however in order to underpin Spirent's longer term strategy and future growth we will continue to increase the level of investment in new product development in order to bring new solutions to market that will offer our customers the capability they demand.

With a market cap of 850 million pounds, Spirent's shares trade at 16 times expected earnings and offer a prospective dividend yield of 1.7%.

Of course, whether that valuation, today's results, and the future prospects for the telecoms industry all combine to make the shares of Spirent a buy remains your decision.

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The article Profits Slide 70% at Spirent Communications originally appeared on Fool.com.

Mark Rogers has no position in any stocks mentioned. The Motley Fool recommends Spirent Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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