Morgan Stanley Cuts DMC Stratex

Analyst Arindam Basu thinks pricing pressure will hit the mobile-wireless industry over the next several quarters

Morgan Stanley downgraded DMC Stratex (STXN ) to neutral from outperform. Analyst Arindam Basu says demand, pricing and payment terms have been holding up in the mobile-wireless backhaul market despite economic and market pressures. However, he believes payment terms competition is intensifying now, particularly at less-established carriers. He thinks price competition is next and is likely to intensify over the next several quarters. Basu says the most intense markets for price competition are China, South America and Eastern Europe. At least a third of the company's revenues are generated in these markets. Basu cut the $0.26 fiscal 2002 (March) EPS estimate to $0.21.

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