Spirent turnaround provides welcome boost for telecoms sector

The recovery in the telecoms sector was in evidence yesterday as Spirent, an equipment tester, returned to profitability and forecast solid sales growth.

The recovery in the telecoms sector was in evidence yesterday as Spirent, an equipment tester, returned to profitability and forecast solid sales growth.

News of the turnaround in its performance over the past six months sent Spirent's shares up more than 20 per cent during the day, before closing up 16 per cent at 55.5p. Spirent specialises in next-generation technology, such as broadband and 3G (third generation) wireless. Its core testing unit, which assesses new equipment and systems for companies such as Cisco, Alcatel and BT, has driven the turnaround as its customers begin to increase their development spends in these areas.

Eric Hutchinson, the finance director, said this was a long-term trend and that underlying growth in this division - which accounts for about one-third of its sales - would continue at about 20 per cent for the rest of the year. "We are very encouraged by these results. It is a clear demonstration that our investment in the development of the business is paying off. This is the first time we have seen positive results since 2001," he said.

A number of one-off contracts also boosted sales in its testing unit - by 30 per cent in the half year, on a constant currency basis to £83m. This helped lift Spirent into a pre-tax profit of £14m for the first half of 2004, reversing last year's £9.3m loss.

But this rebound has not filtered through to its service assurance division, which provides monitoring and probing equipment to watch over systems at work. Turnover here dropped 9 per cent to £42m and operating profits more than halved to £2.2m.