UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of June, 2006
SPIRENT COMMUNICATIONS plc
_____________________________________________________________________
(Translation of registrant's name into English)
Spirent House, Crawley Business Quarter, Fleming Way, Crawley, West Sussex
RH10 9QL, UK.
_____________________________________________________________________
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F.....
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ..... No X
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ________
SPIRENT COMMUNICATIONS plc
TRADING UPDATE
London, UK - 14 June 2006: Spirent Communications plc (LSE: SPT; NYSE: SPM), a
leading communications technology company, is issuing the following trading
update today.
Summary
- Revenues for the six months ending 2 July 2006 are expected to be in
line with market expectations, during a period of significant product
transition.
- Profitability in the Performance Analysis division for the first half is
expected to be lower than previously anticipated in our statement on 3 May
2006 by GBP4 million to GBP6 million, which we do not expect to be
recovered during the second half.
- The Company will continue to carefully manage the balance between the
cost base and maintaining the capability to generate long term growth.
Current trading
We reported at the time of the Annual General Meeting on 3 May 2006 that revenue
for the first quarter, albeit typically our quietest, was ahead of expectations
but that trading was characterised by variable market conditions and a very
competitive market place. These trends have continued into the second quarter
where we have seen a tough market background with volatility in demand, as has
also been reported by other companies in the test and measurement sector.
In addition some short term delays to product launches and our decision to
continue to incur a higher level of investment in product development and sales
and marketing, to create a stronger long term market position, has also affected
profitability in the second quarter.
Although we expect that revenues will be in line with market expectations for
the first half, risk remains as to the final outcome as the bulk of our revenues
for the second quarter are usually realised during the last weeks of June.
Performance Analysis
- Performance Analysis Broadband continues to manage a significant
transition in product revenues, as sales of older platforms decrease and
are replaced by the sales of the new product solutions incorporating latest
technology. This month we have launched the next release of Spirent
TestCenter(TM), which addresses the needs of the IPTV development market
and delivers a significant improvement in time to test, unmatched by other
providers. We believe that this will deliver significant competitive
advantage. However, the launch date was later than planned as we undertook
extended engineering efforts to develop and test the latest product
release, particularly the increased ability to test large-scale devices to
meet leading-edge market requirements. This has delayed revenue upside
expected to fund the additional investment in product development during
the second quarter. In addition we have extended the period of increased
spending on sales and marketing in order to gain market position for the
long term, further reducing profits in the short term.
- Performance Analysis Wireless has experienced a slowing in demand in the
WCDMA market due to delays in deployment of location based technologies and
for conformance test. In addition there have been delays to order intake,
resulting in lumpy demand patterns in some parts of the business.
Service Assurance
- The Service Assurance division is expected to meet its planned first
half performance; however we expect revenues on legacy products to continue
to decline year on year through the second half. We continue to believe
that we are well placed to serve the needs of carriers to monitor
next-generation networks, however revenues for such solutions are now not
expected to be achieved until 2007. We will continue to manage the
division to maintain a near break-even result.
Systems
- The Systems group continues to perform profitably and in line with
expectations.
Intangibles amortisation and goodwill impairment under International Financial
Reporting Standards ("IFRS")
Under IFRS the expected revenue decline in the Service Assurance division is
likely to necessitate a further goodwill impairment at the interim stage.
In addition, as required by IFRS, an exercise is being carried out to identify
and to determine the fair value of the intangible assets in relation to the
acquisitions of SwissQual and QuadTex. Intangible assets identified will be
amortised over their remaining lives as an operating expense. Initial
indications are that the annualised amortisation charge will be in the region of
GBP2.5 million.
Goodwill impairment and amortisation of intangibles do not impact the cash flows
of the Company.
Anders Gustafsson, Chief Executive, commented:
"As we indicated previously, 2006 is a year of product transition as the
increased capability of our new products and solutions is expected to enable us
to gain market share. However delay in orders, the competitive market place and
our increased investment are likely to impact profitability in the short term.
"To date we have been encouraged both by the performance of our new products and
by the response of our customers with a considerable number of trials of Spirent
TestCenter(TM) now underway."
Spirent Communications plc will issue its interim results on 10 August 2006.
- ends -
Enquiries
Anders Gustafsson,
Chief Executive Spirent Communications plc +44 (0)1293 767676
Eric Hutchinson,
Chief Financial Officer
Reg Hoare/Katie Hunt/Libby Young Smithfield +44 (0)20 7360 4900
About Spirent Communications plc
Spirent Communications plc is a leading communications technology company
focused on delivering innovative systems and services to meet the needs of
customers worldwide. We are a global provider of performance analysis and
service assurance solutions that enable the development and deployment of
next-generation networking technologies such as broadband services, Internet
telephony, 3G wireless and web applications and security testing. The Systems
group develops power control systems for specialist electrical vehicles in the
mobility and industrial markets. Further information about Spirent
Communications plc can be found at www.spirent.com.
Spirent Communications plc Ordinary shares are traded on the London Stock
Exchange (ticker: SPT) and on the New York Stock Exchange (ticker: SPM; CUSIP
number: 84856M209) in the form of American Depositary Shares ("ADS"),
represented by American Depositary Receipts, with one ADS representing four
Ordinary shares.
Spirent and the Spirent logo are trademarks or registered trademarks of Spirent
Communications plc. All other trademarks or registered trademarks mentioned
herein are held by their respective companies. All rights reserved.
This press release may contain forward-looking statements (as that term is
defined in the United States Private Securities Litigation Reform Act of 1995)
based on current expectations or beliefs, as well as assumptions about future
events. You can sometimes, but not always, identify these statements by the use
of a date in the future or such words as "will", "anticipate", "estimate",
"expect", "project", "intend", "plan", "should", "may", "assume" and other
similar words. By their nature, forward-looking statements are inherently
predictive and speculative and involve risk and uncertainty because they relate
to events and depend on circumstances that will occur in the future. You should
not place undue reliance on these forward-looking statements, which are not a
guarantee of future performance and are subject to factors that could cause our
actual results to differ materially from those expressed or implied by these
statements. Such factors include, but are not limited to: the extent to which
customers continue to invest in next-generation technology and deploy advanced
IP-based services; our ability to manage a significant transition in product
revenues to new product solutions incorporating latest technology; our ability
to successfully expand our customer base; continuing variable market conditions;
pace of economic recovery; our ability to improve efficiency, achieve the
benefits of our cost reduction goals and adapt to economic changes and other
changes in demand or market conditions; our ability to develop and commercialise
new products and services, extend our existing capabilities in IP services and
expand our product offering internationally; our ability to attract and retain
qualified personnel; the effects of competition on our business; fluctuations in
exchange rates and heavy exposure to the US dollar; changes in the business,
financial condition or prospects of one or more of our major customers; risks of
doing business internationally; risks relating to the acquisition or sale of
businesses and our subsequent ability to integrate businesses; our reliance on
proprietary technology; our exposure to liabilities for product defects; our
reliance on third party manufacturers and suppliers; and other risks described
from time to time in Spirent Communications plc's Securities and Exchange
Commission periodic reports and filings. The Company undertakes no obligation to
update any forward-looking statements contained in this press release, whether
as a result of new information, future events or otherwise.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
______LUKE THOMAS______
(Registrant)
Date: 14 June 2006 By ____/s/ Luke Thomas____
(Signature)*