- Q4 revenue at lower end of guidance
- FY revenues down 12.6 per cent
- Increased investment planned for restructure
Telecoms testing group Spirent has warned fourth-quarter sales were at the bottom end of guidance, as slower US demand counterbalanced a strengthening in Asia and Europe.
The FTSE 250 group said revenues for the period would be around $115m, meaning full year revenue would be down 12.6% to roughly $413m.
Demand is strengthening in Asia and Europe, and there were further increases in the order book reflected in a book-to-bill ratio of 108 for the quarter.
Recently promoted Chief Executive Eric Hutchinson, who was promoted from Chief Financial Officer in September, foresees continued volatility in the medium-term and has begun to restructure, with a consequent increase in operational expenditure and 'selective acquisitions'.
A statement from Spirent said a number of senior management and structural changes have been effected "to deliver a streamlined, decentralised and more simplified business", with full details to emerge with result on February 27th.
The structural changes include acceleration of the development of virtual test systems, software defined networking solutions, expansion of its enterprise sales channel, enhancements to Spirent's Cyber Security test offering as well as advancements in automotive software and related connectivity testing.
Management warned the initiatives will require an increase in the investment in both product development and sales and marketing in 2014.
"These internal changes have been made to create a more agile and responsive organisation to better serve Spirent's customers as well as sharpen the business's focus on anticipating customers' requirements for the future."
Broker Panmure Gordon was encouraged as the quarterly result was ahead of its expectations, with a solid order book and strengthening demand in Asia and Europe, and that Hutchinson "is in a resolute mood". It retained its 'buy' rating.
However analysts at Jefferies said "Spirent's woes look set to continue into 2014" as networking and applications (N&A) issues add to those in wireless and spending rises more than expected, "meaning profits are flat this year".
Jefferies acknowledged that the restructuring and on-going share buybacks could yet support the story.
"China is brightening but all in we think 2014 is a year of slow improvement," was the conclusion, with its rating downgraded from 'buy' to 'hold'.
Shares in Spirent were down 13.9% to 85.53 by 11:40 on Thursday.