I wanted to draft a longer form column for Seeking Alpha connecting the dots on various telecom equipment manufacturer earnings reports for Q3. It's not an exhaustive list, just some major ones that caught my attention.
The point is major TEMs are seeing double digit declines in revenue from service provider customers. It doesn't make sense to me that CSP capex spend would be down given the exponential growth of network traffic and end user demand traversing the network.
Could it be that CSPs are redirecting that capex spend to new, more affordable technologies that are designed to increase network capacity? That is the whole point of creating a distributed datacenter architecture for the telco cloud, running software on top of commodity hardware, similar to Cloud Computing.
My guess is the pain will continue for traditional TEMs while other players see a huge benefit like Gigamon (NASDAQ: GIMO), AMDOCS (NASDAQ: DOX), RADCOM (NASDAQ: RDCM) and Radisys (NASDAQ: RSYS).
Disclosure: I own RDCM shares.