ACG Research has released its 1Q Vendor Financial Index report, which delivers independent information about the sustainability of a vendor or company to help providers assess the risk of selecting the right vendor to meet their business requirements and to ascertain a risk level on the stability of the vendor regardless of technology innovations.
Low-risk vendors for the quarter are Adtran, Brocade, Cisco, and Juniper. Characteristics of low-risk vendors include strong revenue outlook, high operating margins because of sales, solid gross margin and expense discipline, low debt dependency, and high receivable efficiency ratio. Adtran’s growth continues with its international business increasing 56 percent year over year. The company posted strong performance in EMEA and Latin America, attributed to increased Broadband Access product sales). Brocade, which is focusing on efficiency, had the highest operating margin in the industry, 21.5 percent, increasing 43.8 percent quarter over quarter. Cisco’s US commercial and enterprise orders increased by 10 percent year over year. The company also posted a high operating margin, increasing 47.3 percent quarter over quarter. Juniper continues to pursue its restructuring plan, cost cutting initiatives and diversification of revenue with the goal of increasing efficiency in delivery of services and customer support.
Cyan, Ciena and ZTE are high risk, which is characterized by low inventory turnover ratio, revenue decreases and low value of equity to debt ratio. Cyan’s bottom line continues to be affected by cautious ordering patterns by its customers. The company, however, continues to enhance its Blue Planet SDN and NFV software platform, which is attracting positive attention from the industry. Although Ciena’s revenue continues to come from sales to a small number of service providers, the company’s partnership with Ericsson (for SDN products) should drive international revenues. ZTE’s revenue dropped 9.5 percent quarter over quarter; the company is focusing on sales of 4G infrastructure in China and international growth to drive revenue.
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