A couple of months back, China Mobile Ltd. (ADR) (NYSE:CHL) had issued an LTE tender for 207,000 base stations, and this was its largest ever tender, according to China Daily. The newspaper also pointed out that the telecom giant will also boost its capital spending by close to 50% this year to $30.5 billion and a substantial portion (around 50%) will be spent on the TD-LTE roll out. And considering that Chinese vendors such as Huawei are expected to be preferred choices for the equipment, Uniphase might see more revenue come in from the Middle Kingdom.
After a closer look, it makes sense to hold on to Uniphase. The company’s new products have been selling well but it’s the decline in sales of its legacy products that has probably led to weaker performance in telecom. Also, management has exercised caution while issuing the outlook, which might be a good thing if Uniphase trumps its own estimates next time.
The opportunity in optical components and communications test equipment is substantial as telecom players around the world (especially the U.S. and China) roll out LTE and more datacenters are built. If Uniphase’s new products are indeed finding traction, then the company might see its top line grow once again.
The article Why Holding On to This Stock Is a Good Idea originally appeared on Fool.com and is written by Harsh Chauhan.
Harsh Chauhan has no position in any stocks mentioned. The Motley Fool owns shares of China Mobile.
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