Anite, predominantly a wireless testing business, has brought forward its first quarter update to clarify the trading situation and to re-set near-term expectations. Excellent full year results were published in early July and accompanied by a positive outlook (see Wired for Growth). As a consequence, today’s cautious statement will be unwelcome.
Trading in the largest division, Handset Testing (two-thirds of Group revenue), has been slow in the first quarter to end June, to such an extent that the expected revival in the current quarter will not be sufficient to push results ahead at the half-year stage. The company will therefore have to depend more on the second half, in reality the traditionally strong final quarter, to deliver full year figures ahead of last year and to meet management’s expectations of growth. This is placing a big burden on the final three months of the year, particularly against challenging comparatives following a good Q4 for Handset Testing last year.
Elsewhere in the business, trading appears to be going well. In Networks there is some growth, albeit against a poor Q1 last year and Travel is strong as new contracts move through to revenue delivery.
Nevertheless we consider that Anite’s wireless problems are temporary and a result of hysteresis (or lag) in the market. The wireless market appears strong with low double digit growth, recent acquisitions (Proxim and Genetel) are going to plan and there is no additional pricing pressure. At the same time, as 4G LTE networks continue to roll out globally, they will place extra requirements on network operators and handset suppliers alike. This will involve more capable testing of equipment in terms of data throughput, inter-cell interference and all the other technical issues behind delivering an exceptional customer experience. Anite, in its market-leading position, is well placed to deliver this – it just may take some time for the company to get back into sync.