Telecom-equipment stocks moved higher Tuesday after Alcatel posted strong third-quarter results and predicted sales growth of more than 35 percent this year.
Alcatel (NYSE: ALA) shares moved up $5.25 to $62.38 after reporting sales of 7.9 billion euros and an operating profit of 619 million euros.
Company officials said its telecom units will post sales growth of 35 percent to 40 percent this year and at least 25 percent growth in 2001.
Alcatel's rosy outlook was just the tonic the telecom-equipment sector was looking for as leaders such as Cisco Systems (Nasdaq: CSCO), Nortel Networks (NYSE: NT) and JDS Uniphase (Nasdaq: JDSU) have taken some abuse in the past two months.
Cisco shares fell below $50 a share Monday after Lehman Brothers analyst Tim Luke cut his 12-month price target to $60 to $65 a share from $90 a share due to uncertainty over capital expenditure spending among telecommunications companies.
Cisco shares moved up $3.69, or 8 percent, to $51.75 Tuesday while Nortel and ADC Telecom (Nasdaq: ADCT) gained $4.06 and $3.06 a share, respectively.
JDS Uniphase, which easily topped analysts' estimates in its first quarter, moved up $8.63, or 12 percent, to $79.94.
Sycamore Networks (Nasdaq: SCMR) and Juniper Networks (Nasdaq: JNPR) stormed up $7.50 and $22.13 a share, respectively.
All this relief comes just a week after Nortel spooked investors when it topped analysts' profit estimates in its third quarter but posted disappointing sales of only $7.31 billion.
Investors are hoping Cisco's first-quarter earnings report next week will snap the stock out of its recent malaise.
First Call Corp. consensus expects Cisco to earn 17 cents a share in the quarter.
Last quarter, Cisco raked in $1.2 billion, or 16 cents a share, on sales of $5.72 billion.