Ericsson’s Slide Confirms Capex Fears for Mobile Infrastructure Companies

Mobile infrastructure company Ericsson (NASDAQ:ERIC) lags almost 15.44% percent following a weak fourth quarter report that showed a 20 percent year-over-year slump in North American sales and validated fears of a of a soft telecom capex environment.

Another worry is a 640 bps decline in Ericsson’s gross margin from last year. Pac Crest’s James Faucette has already downgraded Ericsson to Sector Perform, noting that, for the most part, carriers have managed to avoid increasing capex despite surging growth of data traffic. Faucette says that in the future capex will be pressured by slow growth of carrier profits.

Here’s how these top stocks are trading in sympathy:

Alcatel-Lucent (NYSE:ALU): ALU shares recently traded at $1.81, down $0.13, or 6.7%. They have traded in a 52-week range of $1.96 to $6.63. Volume today was 22,096,870 shares versus a 3-month average volume of 19,694,200 shares. The company’s trailing P/E is 5.82, while trailing earnings are $0.31 per share.

Juniper Networks, Inc. (NYSE:JNPR): JNPR shares recently traded at $22.61, down $0.54, or 2.33%. They have traded in a 52-week range of $16.67 to $45.01. Volume today was 12,836,727 shares versus a 3-month average volume of 9,482,320 shares. The company’s trailing P/E is 23.83, while trailing earnings are $0.95 per share.

CIENA Corp. (NASDAQ:CIEN): CIEN shares recently traded at $15.06, down $0.09, or 0.59%. They have traded in a 52-week range of $9.89 to $29.24. Volume today was 4,722,864 shares versus a 3-month average volume of 5,199,470 shares. The company’s trailing earnings are $-2.04 per share.

Tellabs Inc. (NASDAQ:TLAB): TLAB shares recently traded at $4.21, down $0.16, or 3.66%. They have traded in a 52-week range of $3.67 to $5.80. Volume today was 7,012,006 shares versus a 3-month average volume of 5,213,220 shares. The company’s trailing earnings are $-0.53 per share.