Concerns over the U.S. economy, Europe’s debt crisis and tighter monetary policies in emerging countries is causing Standard & Poor’s Equity Research to warn on the communication equipment industry and a sector exchange traded fund.
S&P recently cut its outlook on the communications equipment sub-industry to neutral from positive.
“While we view the continued rapid consumption of network bandwidth as a solid long-term growth driver for the industry, we see a more muted near-term operating outlook,” the analysts wrote in a note last week.
“Specifically, we think macro concerns over the uncertain path of the domestic economy, as well as the impact of increasing European sovereign stress and monetary tightening in emerging markets is creating a more cautious telecom and enterprise spending environment,” S&P added. “Indeed, over the past couple of months, we have seen cautious comments on demand from major equipment vendors Cisco Systems (NasdaqGS: CSCO), Juniper Networks (NYSE: JNPR) and Ciena Corp. (NasdaqGS: CIEN), among others.” [Ciena Outlook Weighs on Networking ETF.]
The S&P team singles out iShares S&P North American Technology-Multimedia Networking (NYSEArca: IGN) as an ETF that’s exposed to the uncertain climate for the communication equipment industry. It has an underweight ranking on the ETF.
iShares S&P North American Technology-Multimedia Networking
Max Chen contributed to this article.