Shares of Juniper Networks (NYSE: JNPR) rose 7 percent to $24.16 Thursday on rumors that AT&T (NYSE: T), one of its key customers, could be making some big equipment purchases this year.
According to a Jeffries & Co. report, AT&T's newly released internal capex budget said that vendor orders were "reasonably healthy," a factor that George Notter, a Jeffries analyst, wrote will be "an important catalyst" for Juniper and other vendors that provide the telco with products.
Slow spending had an effect on Juniper's Q4 2011 results, where net revenues declined 6 percent year-over-year. The Sunnyvale, Calif.-based vendor issued a lower-than-expected Q1 2012 outlook.
Given the competitive nature of the telecom service provider industry to expand their respective consumer and business service sets, AT&T's budget uptick could prompt other providers such as Verizon (NYSE: VZ) and Sprint (NYSE: S) to increase spending to meet their goals.
"Looking at the bigger picture, we expect that capex spending will accelerate shortly among carriers," Notter said.
For more:
- Business Week has this article
Special report: Wireline in the fourth quarter 2011
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