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Green Shoots in Europe's Telecom Industry

Updated on
Alcatel-Lucent Says Europe Risks Turning Into Digital Desert
An employee walks past banks of computer servers at the Alcatel-Lucent Bell Labs facility in Villarceaux, France. Photographer: Balint Porneczi/Bloomberg

Selling anything but bailouts in many parts of Europe right now is a tall order. But at least one data point indicates that capital spending by telecommunications service providers -- which is often viewed as an early indicator of trends in the broader tech market -- may be loosening up.

Kevin Johnson, the chief executive officer of Juniper Networks, the second-biggest maker of computer-networking equipment after Cisco Systems, said this week that his company has started seeing a pickup in orders from some European telecommunications companies . It's certainly not a sign that the debt-ravaged region is suddenly healthy again. But improved spending by telcos in Europe could benefit other Internet and mobile-technology companies.

Some technology companies simply have to spend money, regardless of how the overall market is doing. Telcos are a prime example. Rising smartphone use and Internet traffic means their networks are running "hotter than normal," according to ISI Group analyst Brian Marshall. In response to those trends, money must be spent on upgrading the networks.

Back in February, Cisco offered a similar assessment when CEO John Chambers said he was seeing some "stabilization" in the region. However, Chambers also cautioned that it was too soon to call it a full recovery.

Still, if the customers of Juniper and other network-equipment makers are projecting growth and investing based on it, it could signal that higher spending by consumers and corporations on things ranging from smartphones to data centers might not be far behind. At least, that's the hope.

This story was first published in Bloomberg's Global Tech Today newsletter. To get an early jump on the top tech news from around the world, sign up for the free weekday report .

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