(Adds CEO quotes, updates shares)
* Full-year pretax profit falls 3 pct to $110.7 million
* Company expects weak demand continuing in first half of
* Shares fall as much as 8 pct
By Richa Naidu
Feb 28 British telecoms testing company Spirent
Communications Plc warned that weak demand would persist
in the first half of 2013 as service providers continue to hold
back on spending, especially in the United States.
Spirent's shares fell as much as 8 percent on Thursday,
making it the top loser among UK mid-caps.
The United States contributes half of Spirent's revenue, and
clients such as Verizon Communications Inc and AT&T Inc
cut capital expenditure in the second half of last year as
politicians in Washington squabbled over a huge fiscal deficit.
Now, with the government having averted the "fiscal cliff"
at the beginning of the year, the economy faces automatic
spending cuts -- known as sequestration -- unless Congress and
the White House come to a deal on the budget.
"The U.S. government remains difficult with the
sequestration coming up at the end of this week ... so (the
United States) will remain a challenging market," Spirent Chief
Executive Bill Burns told Reuters.
Spirent, which tests ethernet networks and 3G and 4G
wireless networks and devices, said it expected some recovery in
spending by U.S. telecom carriers towards the second half of the
Jefferies & Co analyst Lee Simpson agreed that spending
would not pick up before the second half, but he maintained his
"buy" rating on Spirent's stock.
Spirent's book-to-bill ratio, an indicator of future
revenue, is expected to be "either 1 or just above 1" in 2013,
Chief Financial Officer Eric Hutchinson told Reuters.
A ratio higher than 1 implies that more orders were received
than filled, indicating strengthening demand. The book-to-bill
ratio fell to 0.97 in 2012 from 1.03 in 2011.
Burns said there were signs that T-Mobile USA, a unit of
Deutsche Telekom AG and Sprint Nextel Corp
would also likely increase capital expenditure.
AT&T has the second-largest capital expenditure projection
for 2013 among U.S. companies.
Burns noted that the 3 percent fall in Spirent's pretax
profit in 2012 was a little more than analysts' expectations.
Pretax profit fell to $110.7 million in 2012 from $114.3
million a year earlier, while revenue rose less than 1 percent
to $472.4 million.
Growth in the company's core performance analysis division,
which tests current and next-generation mobile phones, slowed to
4 percent in 2012 from 14 percent a year earlier while
contributing 92 percent of total revenue.
Spirent shares were down 7.8 percent at 152.7 pence at 1208
GMT on the London Stock Exchange.
(Editing by Joyjeet Das and Ted Kerr)