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Cramer: A Resurgence in Telco Spend

Editor's Note: This article was originally published at 7 a.m. EDT on Real Money on Sept. 9, as part of the NFL Kickoff Open House. Sign up for a free trial of Real Money.

One word: optical.

OK, it's not exactly like in The Graduate, the fabulously funny movie in which Dustin Hoffman's character is told that the future is in plastics.

But if you did want to invest in the cyclically hottest area of tech right now, it would have to be in telco equipment, specifically anything related to higher-performance video through your cell phone.

The group's been a confusing one because of the quarter reported last by Cisco (CSCO - Get Report), which contained almost nothing about telco-equipment spending. In fact, that quarter did more to obfuscate the unfolding positive story about telco spend than anything else, because it kept a lid on Ciena (CIEN - Get Report) and Finisar (FNSR). After all, investors presumed, how good could it be for these also-rans when it's bad for Cisco?

In fact, I now think it is glaringly obvious -- although market disagrees with me -- that Cisco is actually having an amazing quarter. But can you really say that as you lay off 4,000 people? Can CEO John Chambers declare, "This is the age of renewed telco spend, but forgive us while we ax 4,000?" No, he can't. Not Chambers. That's not his style. Unfortunately that means you won't know that anything really good is happening there until you see the quarter, which is ages away.

But there are so many other ways to play it. Last Friday I posited that the news flow out Alcatel Lucent (ALU) is going to get better and better. New management -- even, at last, a new chief financial officer - will at last be in shape to translate orders into profits, and I think that Alcatel Lucent is going to get more than its fair share of European orders. Don't forget that Vodafone (VOD) will be flush with cash to build out whatever it needs, and that means some hefty orders for Alcatel Lucent. Alcatel might be one of the most exciting speculations in the world right now. I love how people tell me how I have missed it because the stock had been at $2. But that's the same catcalling I heard when I said that Nokia (NOK) was too cheap to avoid at $4. Where was I at $3?

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