With tech earnings season approaching, it’s important for investors to be aware of the warnings coming from some of the industry’s less-followed players. These companies have been cautioning about emerging weakness in the enterprise and telecommunications-networking landscape.

Concerns Ahead of Earnings

Amit Daryanani, a hardware analyst at Evercore ISI, expressed his concerns about several key areas. He noted that there may be weakness in IT enterprise spending, continued soft demand from communications carriers, and a sense of caution among consumers. However, he did highlight one positive aspect: increased spending on cloud and AI infrastructure.

Cautious Companies Highlighting Outlook

The list of companies expressing caution about the future is expanding rapidly. Two notable examples are NetScout Systems and Ericsson.

NetScout Systems

On Tuesday, cybersecurity software company NetScout Systems saw its stock (ticker: NTCT) plummet by 17%. This drastic drop came after the company revised its revenue forecast for the fiscal year ending in March 2024. The new range is $840 million to $860 million, a significant decrease from the previous forecast of $915 million to $945 million. Additionally, NetScout trimmed its adjusted profit per share forecast for the year to a range of $2 to $2.20, down from $2.20 to $2.32. The company cited “slower order conversion” as a result of industry and economic headwinds faced by its customers since September.

Ericsson

Ericsson American depositary receipts (ERIC) also experienced a decline of 3.3% following disappointing financial guidance issued on Tuesday. The networking infrastructure company expressed concerns about continuing uncertainty in its Mobile Networks business, expecting it to persist throughout 2024.

Adtran’s Warning

Another company, Adtran, which specializes in networking hardware, issued a warning on Monday. They revised their third-quarter revenue expectations to $272.3 million, falling below their previous guidance range of $275 million to $305 million. Adtran attributed this adjustment to their customers’ focus on reducing inventory levels and managing capital expenses.

Overall, these cautionary statements from various companies serve as indicators of the challenges and uncertainties currently faced by the tech industry.

Network Infrastructure Providers Face Revenue Challenges

Late last week, Belden (BDC), a prominent network infrastructure provider, announced a downward revision in its third-quarter revenue forecast. The company now anticipates revenue of $625 million, a decline from its previous estimate of $675 million to $690 million. Belden attributed this revision to weakening demand in the third quarter and ongoing pressure from channel destocking. Furthermore, the company expects the subdued demand to persist into the fourth quarter, leading to adverse effects on both revenue and profitability.

A10 Networks (ATEN), another player in the networking infrastructure sector, also faced disappointing results for the September quarter. The company witnessed delays due to North American service provider customers postponing their capital expenditures. As a result, deals that were expected to close by the end of the quarter were delayed, impacting the company’s financial performance.

Similarly, Cambium Networks (CMBM), a wireless-network infrastructure provider, reported a significant miss in its third-quarter revenue projections. The company now expects revenue in the range of $40 million to $45 million, falling short of its previous guidance of $62 million to $70 million. Several factors contributed to this deviation, including delayed government orders stemming from U.S. government budgetary timing issues and reduced orders from distributors in Cambium’s enterprise business.

As we enter tech earnings season, starting with Netflix (NFLX) reporting on Wednesday, numerous financial reports are set to follow next week. Expect updates from prominent companies such as Alphabet (GOOGL), Microsoft (MSFT), International Business Machines (IBM), Meta Platforms (META), ServiceNow (NOW), Amazon.com (AMZN), Intel (INTC), and Juniper Networks (JNPR), among others.

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