Telecoms testing firm Spirent’s shares plunge 34% on profit warning

Shares in telecoms testing firm Spirent Communications plunged by as much as 34.3% as it warned its clients are delaying their spending on infrastructure.

The business expects a 20% fall in revenue this year as network providers which use Spirent to make sure their 5G services are not at risk of going down “continue to be very challenged”, and so are not spending on Spirent’s services.

The business said that, after a weak  start to  the year, it had expected to see “a strong pick-up in orders from China”, which represents a large portion of its revenue. However, this did not occur, as the Chinese government cut spending amid fears that trouble in the country’s property sector could turn into a wider crisis.

Spirent said it would cut costs because of the lower trading, but it still expects to miss its profit guidance.

CEO Eric Updyke said: "A slow summer and disappointing September meant that we fell materially short of our expectations for the third quarter.

“In the long run, our drivers remain intact, but the near term orderbook isn’t strong enough to support our final quarter expectations, and our outlook for the full year reduces accordingly.

“Given the lack of certainty in the timing on our customers’ technology roadmaps, we are taking the necessary cost actions, while being careful to protect those investments that enable us to maximise our long-term structural growth drivers.”

Shares tumbled on the announcement, losing a third of their value to 86.1p. That leaves the firm, valued at £1.74 billion as recently as January, with a market cap of a little over £500 million.