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TheStreet Open House

Telecom Stocks: Year in Review

NEW YORK ( TheStreet) -- Telecom investors entered 2013 with analysts predicting a strong rebound in carrier spending. Pundits expected the likes of Verizon (VZ) and AT&T (T) would loosen their purse strings and reinvest capital back into their infrastructure, which would bode well for telecom giants like Cisco (CSCO) and Ciena (CIEN).

Given that the entire industry was able to post 20% gains, I grant that telecom equipment spending did recover. But it certainly wasn't at the robust levels that the Street expected. On the other hand, I don't believe investors anticipated the level of M&A activity that occurred, either.

[Read: Google to $2,000 in 2014]

The year began with database giant Oracle (ORCL), with stock price gains of 13.1% in 2013, picking off Acme Packet for $2.1 billion. Little more than a month later, the company announced its intent to acquire network vendor Tekelec. Not to mention, given Tekelec's mobile traffic handling capabilities, Oracle is now able to leverage Acme Packet's existing strengths in data control to service the needs of large telecom giants like Verizon. This was a space previously dominated by Cisco and Juniper (JNPR).

The biggest winner in terms of M&A is Nokia (NOK). After spending $2.22 billion to buy the remaining portion of its joint venture with Siemens (SI) called Nokia Siemens Network (NSN), Nokia stunned the Street by selling its handset business to Microsoft (MSFT) for 5.44 billion euros ($7.2 billion). Essentially, in two deals, Nokia was able to solve its cash problems and I believe the company has a more attractive business now that it no longer has to compete with Apple (AAPL) and Samsung (SSNLF).

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