bought qcom and jnpr (reports 7-13) Lucent, Tellabs Could Report Upside Earnings
07.08.04, 11:31 AM ET
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Merrill Lynch said it expects a sequentially flat calendar second quarter for wireline telecom companies but sees potential for Lucent Technologies (nyse: LU - news - people ) and Tellabs (nasdaq: TLAB - news - people ) to beat the research firm's estimates. Merrill cited new initiatives at Lucent including voice over Internet protocol and Metro Optical networking products and noted that "strength continues in the legacy cross connect business at Tellabs." Merrill expects Lucent to meet or beat the firm's estimate for earnings of 2 cents per share on revenue of $2.17 billion in the fiscal third quarter ended June. The firm said Tellabs will meet or beat its second-quarter earnings estimate of 5 cents per share on revenue of $276.1 million. The research firm said it also expects Juniper Networks (nasdaq: JNPR - news - people ) to report a strong quarter. Merrill said its checks indicate Juniper's revenue from NetScreen network security products this quarter are inline with the estimates, despite some employee departures. Among data networking companies, Merrill said it expects Cisco Systems (nasdaq: CSCO - news - people ) will outgrow competitors in the second quarter with sequential growth of 4% to 6%, despite Cisco's own guidance for growth of 3% to 5%. "We think that Cisco's growth is selective with switching growing more than the other divisions," Merrill said. Extreme Networks (nasdaq: EXTR - news - people ) and Foundry Networks (nasdaq: FDRY - news - people ) should meet or come in slightly below sequential growth expectations of 2.4% and 3.8%, respectively, the firm said. "Extreme continues to confront issues with product distribution following the departures of key sales and marketing officers, and Foundry may experience some lumpiness in larger orders," Merrill said.
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