Friedman Billings Ramsey analyst Brian Coyne sees the market heating up for cable equipment vendors, citing three reasons.
First will be the hundreds of millions being spend by Comcast and Time Warner on maintenance and upgrades to the systems they just took over (Aug. 1) from bankrupt Adelphia.
Second is the acceleration of cable Voice over Internet Protocol (VOIP) phone service, which cable is ramping up in competition to phone companies.
Third is the potential for new service rollouts in response to video offerings by Verizon (FiOS) and AT&T (U-Verse)
As a defensive move, Coyne sees a ramp-up in residential speeds from the cable nets, says bundling in voice is the key to success for wired operators, and suggests the post-Adelphia revamps should provide at least a short-term boost.
Also driving equipment purchases will be the new clustering of Comcast and Time Warner systems--they did some swapping along with the Adelphia deal to achieve greater geographic concentration.
Coyne sees equipment companies including Arris, C-COR, and CommScope all benefiting from the trend.
But as with all predictions, there are caveats. Factors that could stick a thorn or two into that rosy scenario include vaunted advanced-services market failing to develop, technology driving existing product out of the market, and a number of others relating to margins or balance-sheet issues at individual vendors.