After spending years trying to persuade U.S. regulators to ease their restrictions, China’s Huawei is acknowledging that the political climate prevents it from building any sizable business selling network infrastructure to carriers here.
“Given the U.S. carrier equipment market environment, Huawei is prioritizing its carrier business on markets that are open to competition, innovation and investment,” Huawei spokesman William Plummer said in an email interview.
The company isn’t pulling out of the U.S. for sure, where it has a significant phone business as well as efforts in enterprise networking and other markets.
“We remain committed to our customers, employees, investments and operations and more than $1 billion in sales in the U.S., and we stand ready to deliver additional competition and innovative solutions as desired by customers and allowed by authorities,” Plummer said.
His comments follow an interview where Huawei CEO Ren Zhengfei told French journalists that the company was tired of being stuck in the middle of a political dispute. Despite reassurances that they are independent businesses, U.S. officials have worried about potential security risks of allowing Huawei and Chinese rival ZTE to sell their network infrastructure products to domestic carriers.
Meanwhile, The Wall Street Journal reported that the Obama administration is privately raising concerns with South Korea about its plans to let Huawei develop the country’s advanced wireless network. The administration privately lobbied Australia on the same issue earlier. Washington sees a risk that the company’s equipment could be used for spying on communications among the allies, U.S. officials say.
For the past few years, most of the conditions for an M&A revival have been in place. Companies have plenty of excess cash, profit margins are strong, but probably peaking, stock prices have been rising, and borrowing costs are at historic lows.
Yet CEOs have remained largely risk-averse, scarred by the 2008 financial crisis and real and imagined aftershocks to the global economy, not to mention perceived fiscal and monetary “policy risk.” Big companies are running their businesses lean, redeploying extra cash into share buybacks and dividends, essentially shrinking their financial footprint rather than pursuing bold new growth opportunities.
Through the first nine months of the year, M&A volume was 33% below the levels seen in 2007, the last time the major stock indexes traded near 2013 levels.
Friendly debt markets
It now seems, at last, that companies will entertain more deal-making in the coming year, for a variety of reasons in addition to the cash-rich, cheap-debt elements noted above.
Investment-research firm Strategas Group says, “A combination of recession-like nominal GDP growth, vast cash hoards on corporate balance sheets, and a growing activist investor base could make 2014 the year the much-anticipated M&A boom finally takes place. We’ve asked rhetorically before, if Apple (AAPL) isn’t safe from the influence of activists like Carl Icahn, what company would be? Next year might very well be a use-it-or-lose-it year for cash.”
The persistently low nominal growth rate of the global economy has reinforced corporate managers’ resistance to investing heavily in their own businesses through capital spending and research-and-development efforts. The idea of “buying growth” by acquiring an established company is likely to seem more attractive.
Strategas points out that assets under management at dedicated activist hedge funds has doubled since 2009 to a record near $80 billion, an amount of cash that can be amplified as it is mobilized, considering that
Wow very strange trading action today. Someone with a large holding is or hopefully has exited ! Even the big boys must take profits. I am slightly concerned with what I saw today, everyone else is up !
looks like more deceptive BS !
No ! Never heard of fishing Xela(Quetzaltenango)? Fresh or saltwater? What kind of fishing / fish ?
Goofy, You are just repeating what has already been said here and what us Longs already know ! You are the only one here patting you on your back, the rest of us just wave your stank away !!!
Though its Q3 results beat estimates, Infinera (INFN -9.4%) guided on its CC (transcript) for Q4 revenue of $130M-$140M and EPS of breakeven to -$0.04, below a consensus of $141.1M and $0.03. Gross margin is expected to fall back to ~40% after rising to 49% in Q3 (+1000 bps Q/Q and Y/Y).
While Infinera expects to benefit from "a number of significant new wins and deployments" in Q4, the company doesn't "expect significant budget flush or year-end money" from carriers.
Moreover, while Infinera has won a number of new deals - five new purchase commitments were scored for its DTN-X optical transmission platform - deal timing "remains challenging because of [Infinera's] short lead times and the strategic nature of many of these customer decisions."
Ciena (CIEN -7.3%) is selling off on the guidance and commentary, as are many optical component suppliers. Ericsson's numbers might not be helping either. CIEN -7.6%. FNSR -7.2%. JDSU -3.4%. NPTN -2.4%. OCLR -2.3%. AFOP -3.2%.
Infinera also disclosed CFO Ita Brennan is resigning, effective Feb. 28, 2014, to work for a startup. The company says it will start a search for a replacement.
Yes disappointing Fallon's CC yet again was a let down and that we are not moving up from here however if this is a long term play for you this not a worry in the least. Rev's continue to grow, DTN-X demand is strong margins continue to improve and big TIER 1 contracts are in the future ! Also with Ita's departure one has to wonder why she chose the date that she did. If INFN were to be acquired by a CISCO or Juniper, poor Ita would not be needed and certainly would not be part of any of those management teams ! Just another good possibility ! Come on Fallon let's bring a little more certainty to this picture !
I see a BUMP in GUIDANCE COMING !
it seems your sentiment is well supported by the current stock performance. ;-(
Baker and Zvi's meal tickets have almost expired. To bad they cant be held personally responsible for misleading all of us in this board.
Those figures absolutely #$%$ away !
Street has rev's in the $140mm range, $143 is not that big a deal. Maybe a little bump but this quarters rev's will not the the true driver. Guidance will be the driver. A bump of 4th 1/4 rev's and earnings and full year 2014 would be huge. Not sure if Fallon is ready to start messing with 2014 yet but he will be by the end of next quarter. Only a few days to go.
Helluva Rally ! The debt limit and gov't shut down are behind us for the short term. I think this 4th 1/4 is going to make INFN longs very happy and that's without the buy-out.
Tracey, I think with the light volume any pressure on either side is causing a slightly exaggerated response. Re yesterday, someone looking to shed a few shares prior to earnings took advantage of a rally. Today, looks like that shedding continued early on but once the seller was done a little buying action bounced it back up. Anything happening now is really meaningless, next week it what all us longs are waiting for. Fallon is going to make amends for last 1/4's revenue transparency disappointment. I think we will be in the mid-$13.00 range before December. Most analysts were unwilling to put their neck on the line with a strong buy recommendation after our last cc. My hope is that this quarters results and follow on cc will change that !