US Infrastructure Industry Spending Trends - 30th April 09[1]

7/30/2019 US Infrastructure Industry Spending Trends - 30th April 09[1]

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ChangeWave Research: Infrastructure Projects

This information is from ChangeWave Research and contains confidential business information.It may not be copied or distributed without permission. 2009 ChangeWave Research. All rights reserved.

ChangeWave Research Report:U.S. Infrastructure Industry Spending TrendsWinners and Losers in the Race for Federal Stimulus $$$

Overview: Where will President Obamas economic stimulus dollars flow in the race toupgrade Americas infrastructure and which sectors and companies will reap the biggestrewards?

To find out, we surveyed 409 members of the ChangeWave Research Network who work forcompanies involved with infrastructure projects. The March 12-17 survey focused primarily oninfrastructure spending in the Transportation, Electricity/Smart Grid and Broadband sectors.

The results provide an initial roadmap on where stimulus dollars are most likely to be spent

within these rapidly evolving sectors, and which companies should win and lose as a result.

Note this is a benchmark survey. As such, it provides an early look at industry infrastructuretrends that will be the subject of future research on best positioned sectors and companies. Itis the first in a series of ChangeWave industry surveys that will be tracking the impact of U.S.federal stimulus spending.

The Race for Federal Infrastructure Dollars

Industry respondents were asked which infrastructure areas they think will benefit most fromthe U.S. economic stimulus package in the next 12 months. Not surprisingly, Transportation

infrastructure (62%) was the biggest winner followed by Alternative Energy (44%). Electricity/Smart Grid (29%) and Water (11%) also stood out.

ChangeWave recently conducted surveys on the Alternative Energy Industry (Jan 2009) andWater Industry (Oct 2009). In the current survey, weve taken a close-up look at theTransportation and Electricity/Smart Grid industries both greatly affected by the U.S.government stimulus bill and also looked at the Broadband Network industry.

April 30, 2009


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This information is from ChangeWave Research and contains confidential business information.It may not be copied or distributed without permission. 2009 ChangeWave Research. All rights reserved.2

Infrastructure Projects Set for Greatest Growth

First, respondents identified the key project areas they think will experience the most growthover the next 12 months within each industry:

Which of the following U.S. Infrastructure projects do you think will see the most/leastgrowth in spending over the next 12 months?

MostGrowth

LeastGrowth

NetDifference

Score

Transportation ProjectsAutomotive Infrastructure (e.g., Roads, Bridges) 63% 4% +59Mass-Transit Infrastructure (e.g., Buses, Metro-Rail) 15% 8% +7

Electricity Grid ProjectsPower Lines 36% 10% +26Control Systems (i.e., generators, switches, circuitbreakers)

22% 9% +13

Smart Grid ProjectsSmart Meters / Meter Infrastructure 37% 1% +36

Broadband Network ProjectsFiber To The X (FTTx) 20% 5% +15WiMax 18% 6% +12

Next, we took a closer look at infrastructure winners and losers within each industry,beginning with Transportation.

Transportation Infrastructure Projects

A series of questions were posed to 168 respondents working for companies involved in U.S.transportation infrastructure projects. Here are the transportation areas that industryrespondents think will see the most and least growth in spending over the next 12 months:


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Automotive Infrastructure (e.g., roads and bridges) is the clear winner here, with 63% ofindustry respondents believing it will experience the most growth over the next 12 monthsand only 4% believing it will experience the least growth (Net Difference Score = +59).

Of course, a key reason for this is many road and bridge projects have been in the works foryears and are currently shovel-ready, even as they wait for funding.

Mass-Transit Infrastructure (e.g., Buses, Metro-Rail) came in a distant second, with 15%

believing it would experience the most growth and 8% the least growth (Net Difference = +7).

On the downside, Railway Infrastructure (e.g., High Speed Rail, AMTRAK) and AviationInfrastructure (e.g., Airports, Runways) trailed far behind. Note that this survey wasconducted prior to President Obamas latest announcement detailing plans to build anationwide system of high-speed rail lines.

Key Barriers

We also asked respondents about the biggest barriers facing U.S. transportationinfrastructure projects.

What do you think are the biggest barriers to bringing U.S. Transportation

Infrastructure up to 21st century standards?(Choose No More Than Two)Too Much Bureaucracy 61%Not Enough Funding 52%NIMBY (Not-In-My-Back-Yard) Issues 25%Land/Property Issues 14%Lack of Public Interest 9%Legal Issues 7%Other 8%

Bureaucratic Issues (61%) were the biggest barrier identified by respondents likely due tothe multiple layers of decision makers involved in the approval process. Not Enough Funding

(52%) was also a key barrier. Note that the American Association of State Highway andTransportation Officials (AASHTO) has identified 5,148 transportation projects that are readyto go right now in the U.S., worth more than $64 billion.

Not-In-My-Back-Yard issues (25%) also received mention.

Companies to Watch

We asked industry respondents for their opinion on which companies heavily involved intransportation infrastructure will benefit most over the next 12-24 months.Caterpillar (CAT)and CEMEX (CX) ranked at the top of the list, which is not surprising as both play a majorrole in automotive infrastructure (e.g., roads and bridges).

According to one respondent, industry leader Caterpillar represents American ingenuity andhas established itself as a decently run company thats managed its international dealingsquite well. Another calls it the foundation of any infrastructure build.

Building materials producer CEMEX is also well positioned as a supplier of cement, concreteand other material for upgrading roads and bridges. They supply significant material for allconstruction projects, and their fuel costs have dropped writes one respondent.

Construction services and materials producer Granite Construction (GVA) was also cited byour respondents. While GVA is a smaller company, its primary focus is on transportationinfrastructure projects including roads and highways and the production of constructionmaterials. Their business clearly falls within the sweet spot of where stimulus money will flow.


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As one California-based industry respondent puts it, Granite should get most of the localhighway projects that will be hitting the streets in California over the next 6 months.

Fluor (FLR) a global leader in engineering, procurement and construction also rankedhigh on the list and is well-known for managing government funded projects. However, U.S.transportation projects represent a small percentage of its overall revenues.

Electricity/Smart Grid Infrastructure Projects

A series of questions were also posed to 134 respondents working for companies involved inU.S. Electricity/Smart Grid infrastructure projects. Here are the Electricity and Smart GridInfrastructure areas that respondents think will see the most and least growth in spendingover the next 12 months:

Power Lines (+26) are expected to see the strongest growth over the next 12 months. Control

Systems (+13) including generators, switches and circuit breakers are also seen asperforming well.

In terms of the smart grid, Smart Meters and Meter Infrastructure (+36) are seen asexperiencing the most growth over the next year as is clear in the chart below:


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Key Barriers

Industry respondents find Not-In-My-Back-Yard issues (NIMBY; 43%) to be the number onebarrier to upgrading the U.S. electricity grid. In other words, while the public wants electricitydelivered to their homes, they dont want power lines in their back yard. Other importantbarriers: Too Much Bureaucracy (41%) and Not Enough Funding (37%).

Companies to Watch

Multinational conglomerates General Electric (GE) and Siemens AG (SI) are of courseintegral suppliers for major energy infrastructure projects. Though a relatively small part oftheir sales involve the U.S. electricity grid, both companies will be top beneficiaries of federalstimulus funding, according to industry respondents.

ABB Ltd. (ABB) and EMCOR Group (EME), two companies extremely active in electricitytransmission and distribution projects, are expected to get a significant boost from increasedU.S. government spending in these areas.

ABB products and services focus on transmitting and distributing electricity. "ABB is a big

beneficiary due to their large global presence and diversity of product offerings to utilities,"one industry respondent points out. As an infrastructure client of ABB puts it, "ABB sells anddoes almost everything we want, where we want it, when we want it."

EMCOR Group a leader in mechanical and electrical construction and energy infrastructure was also cited by respondents. EME combines its expertise and services with a broadnational footprint that should enable it to quickly mobilize for projects generated by thestimulus plan.

In terms of the Smart Grid, Johnson Controls (JCI) and Itron (ITRI) appear best positioned with Itron having the added advantage that a major portion of its business focuses on Smart

Meters and Meter Infrastructure for electric utilities.

Broadband Network Infrastructure

Broadband was a third sector focused on in this survey.

A series of questions were posed to 173 respondents working for companies involved in U.S.broadband infrastructure projects and while they didnt find this sector benefiting as much inthe short-term, its seen as an important U.S. investment over the next few years.

Fiber to the X (FTTx; +15) and WiMax (+12) are the broadband network project areas

expected to see the most growth in spending over the next year.


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Key Barriers

As we found with our other sectors, Not Enough Funding (55%) and Too Much Bureaucracy(50%) are considered major roadblocks for bringing U.S. broadband infrastructure up to 21st

century standards.

Companies to Watch

Cisco (CSCO) is of course the company to watch here, but Corning (GLW) also receivedmention from our industry respondents.

Cisco basically owns the industry standards, its competition is shrinking, and it has thestrongest strategic partnerships and billions in savings. It handles the high-margin plumbing,while network providers compete for the low-margin direct to consumer business.

Corning is a major supplier of optical fiber, cable and hardware for the telecommunicationsindustry. This segment, representing 30% of the companys sales, should benefit from thebroadband network build-out over the next 12 months according to the survey results.

Bottom Line

This survey of industry respondents focused primarily on infrastructure spending in theTransportation, Electricity/Smart Grid and Broadband sectors.

Below is a summary of infrastructure projects in these sectors that are expected to see themost growth from the inflow of U.S federal stimulus dollars, along with the companies mostexpected to benefit.


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Summary of Key Findings

Infrastructure AreasBenefiting from

Economic Stimulus

Infrastructure ProjectsSet For Greatest Growth

Best PositionedCompanies

(1) TransportationInfrastructure

Automotive (e.g., roads andbridges) (+59) Mass-Transit (e.g., Buses,

Metro-Rail) (+7)

Caterpillar (CAT) CEMEX (CX) Granite Construction (GVA) Fluor (FLR)

(2) Electricity/ SmartGrid Infrastructure

Power Lines (+26) Control Systems (+13)

(e.g., generators, switches& circuit breakers

Smart Meters and MeterInfrastructure (+36)

General Electric (GE) Siemens AG (SI) ABB Ltd. (ABB) EMCOR (EME) Johnson Controls (JCI) Itron (ITRI)

(3) Broadband NetworkInfrastructure

Fiber to the X (FTTx) (+15) WiMax (+12)

Cisco (CSCO) Corning (GLW)

Note that during the 2nd Quarter we will be conducting surveys of the Alternative Energyindustry and the Water Industry to track federal infrastructure spending in these critical areasas well along with the companies most expected to benefit.

The ChangeWave Research Network is a group of 20,000 highly qualified business, technology, and medical professionals aswell as early adopter consumers who work in leading companies of select industries. They are credentialed professionals whospend their everyday lives on the frontline of technological change. ChangeWave surveys its Network members weekly on a range

of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.

Helping You Profit From A Rapidly Changing Worldwww.ChangeWave.com


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Table of Contents

The Findings ..................................................................................................................9

Transportation Infrastructure: Roads, Transit & Aviation ..........................................11

Electricity/Smart Grid Infrastructure.......................................................................... 15

Broadband Network Infrastructure............................................................................ 20

ChangeWave Research Methodology........................................................................25

About ChangeWave Research....................................................................................25


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I. The Findings

Introduction: Where will President Obamas economic stimulus dollars flow in the race toupgrade Americas infrastructure and which sectors and companies will reap the biggestrewards?

To find out, we surveyed 409 members of the ChangeWave Research Network who work forcompanies involved with infrastructure projects. The March 12-17 survey focused primarily oninfrastructure spending in the Transportation, Electricity/Smart Grid and Broadband sectors.

The results provide an initial roadmap on where stimulus dollars are most likely to be spentwithin these rapidly evolving sectors, and which companies should win and lose as a result.

Note this is a benchmark survey. As such, it provides an early look at industry infrastructuretrends that will be the subject of future research on best positioned sectors and companies. Itis the first in a series of ChangeWave industry surveys that will be tracking the impact of U.S.federal stimulus spending.

The Race for Federal Infrastructure Dollars

Industry respondents were asked which infrastructure areas they think will benefit most fromthe U.S. economic stimulus package in the next 12 months. Not surprisingly, Transportationinfrastructure (62%) was the biggest winner followed by Alternative Energy (44%).Electricity/Smart Grid infrastructure (29%) and Water infrastructure (11%) also stood out.


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(A) Transportation Infrastructure: Roads, Transit & Aviation

Respondents Involved With Transportation Infrastructure (n = 168)

A series of questions were posed to 168 respondents working for companies involved in U.S.transportation infrastructure projects.

Here are the infrastructure areas that industry respondents think will see the most and leastgrowth in spending over the next 12 months:

Automotive Infrastructure (e.g., roads and bridges) is the clear winner here, with 63% ofindustry respondents believing it will experience the most growth over the next 12 monthsand only 4% believing it will experience the least growth (Net Difference Score = +59).

Of course, a key reason for this is many road and bridge projects have been in the works foryears and are currently shovel-ready, even as they wait for funding.

Mass-Transit Infrastructure (e.g., Buses, Metro-Rail) came in a distant second, with 15%believing it would experience the most growth and 8% the least growth (Net Difference = +7).

On the downside, Railway infrastructure (e.g., High Speed Rail, AMTRAK) and Aviationinfrastructure (e.g., Airports, Runways) trailed far behind. Note that this survey wasconducted prior to President Obamas latest announcement detailing plans to build anationwide system of high-speed rail lines.

Heres another look at the results:

Over the next 12 months, which of the following U.S. Transportation Infrastructureprojects do you think will see the most growth in spending?

Automotive Infrastructure (e.g., Roads, Bridges) 63%Mass-Transit Infrastructure (e.g., Buses, Metro-Rail) 15%Railway Infrastructure (e.g., High Speed Rail, AMTRAK) 6%Aviation Infrastructure (e.g., Airports, Runways) 3%None Will Experience a Growth in Spending 4%Dont Know / Other / No Answer 10%


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And which of the following U.S. Transportation Infrastructure projects do you think willsee the least growth in spending over the next 12 months?

Aviation Infrastructure (e.g., Airports, Runways) 42%Railway Infrastructure (e.g., High Speed Rail, AMTRAK) 27%Mass-Transit Infrastructure (e.g., Buses, Metro-Rail) 8%Automotive Infrastructure (e.g., Roads, Bridges) 4%

Dont Know / Other / No Answer 18%Net Difference Score

MostGrowth

LeastGrowth

NetDifference

ScoreAutomotive Infrastructure (e.g., Roads, Bridges) 63% 4% +59Mass-Transit Infrastructure (e.g., Buses, Metro-Rail) 15% 8% +7Railway Infrastructure (e.g., High Speed Rail, AMTRAK) 6% 27% -21Aviation Infrastructure (e.g., Airports, Runways) 3% 42% -39

Respondents also rated which entities they thought would see the biggest increases inspending, and it's no surprise that the Federal Government will be the main source.

Over the next 12 months, do you think spending on Transportation Infrastructureprojects within each of the following U.S. sectors will increase, decrease, or willspending remain the same compared to the previous 12 months?

SignificantIncrease

inSpending

SlightIncrease

inSpending

Remainthe

Same

SlightDecrease

inSpending

SignificantDecrease

inSpending

Don'tKnow

FederalGovernment

55% 25% 8% 1% 1% 10%StateGovernment

26% 39% 12% 10% 6% 8%

LocalGovernment

14% 33% 21% 15% 8% 10%

Private Sector 5% 16% 20% 19% 21% 18%


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Key Barriers

We also asked respondents about the biggest barriers facing U.S. transportationinfrastructure projects.

What do you think are the biggest barriers to bringing U.S. TransportationInfrastructure up to 21st century standards?(Choose No More Than Two)

Too Much Bureaucracy 61%Not Enough Funding 52%NIMBY (Not-In-My-Back-Yard) Issues 25%Land/Property Issues 14%Lack of Public Interest 9%Legal Issues 7%Other 8%

Bureaucratic Issues (61%) were the biggest barrier identified by respondents likely due tothe multiple layers of decision makers involved in the approval process.

Not Enough Funding (52%) was also a key barrier. Note that the American Association ofState Highway and Transportation Officials (AASHTO) has identified 5,148 transportationprojects that are ready to go in the U.S. worth more than $64 billion. Not-In-My-Back-Yardissues (25%) also received mention.

Companies to Watch

We asked industry respondents for their opinion on which companies heavily involved intransportation infrastructure will benefit most over the next 12-24 months.Caterpillar (CAT)and CEMEX (CX) ranked at the top of the list, which is not surprising as both play a majorrole in automotive infrastructure (e.g., roads and bridges).

According to one respondent, industry leader Caterpillar represents American ingenuity and

has established itself as a decently run company thats managed its international dealingsquite well. Another calls it the foundation of any infrastructure build.

Building materials producer CEMEX is also well positioned as a supplier of cement, concreteand other material for upgrading roads and bridges. They supply significant material for allconstruction projects, and their fuel costs have dropped writes one respondent.

Construction services and materials producer Granite Construction (GVA) was also cited byour respondents. While GVA is a smaller company, its primary focus is on transportationinfrastructure projects including roads and highways and the production of constructionmaterials. Their business clearly falls within the sweet spot of where stimulus money will flow.As one California-based industry respondent puts it, Granite should get most of the local

highway projects that will be hitting the streets in California over the next 6 months.

Fluor (FLR) a global leader in engineering, procurement and construction also rankedhigh on the list and is well-known for managing government funded projects. However, U.S.transportation projects represent a small percentage of its overall revenues.


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As a follow-up question, we asked respondents Which one Transportation Infrastructurecompany do you think will benefit most and why? Heres a sampling of responses:

ATS09490 writes, "Caterpillar (CAT) - foundation of any infrastructure build."

RRT2061 writes, "Caterpillar (CAT) - you can't build anything without constructionequipment."

ALE12910 writes, " Caterpillar (CAT) represents American ingenuity in this area andhas established itself as a decently run company and one that has managed itsinternational dealings quite well."

WOM43634 writes, " Caterpillar (CAT) - being deeply entrenched in the constructionfield, they will be 'go-to' equipment providers."

CSN64168 writes, "Caterpillar (CAT) - demand for heavy equipment that meets thenew environmental standards."

ELI08474 writes, "CEMEX (CX) - bridge and building construction."

ALN98201 writes, "CEMEX (CX) - lower fuel costs, more spending for new state,county, local government buildings in Obama's bailout bills."

HAT2669 writes, "CEMEX (CX) - sweet spot in materials offerings."

ASR3813 writes, "CEMEX (CX) supplies significant material for all constructionprojects and their fuel costs have dropped."

GCL82843 writes, "Fluor (FLR) to manage government funded projects. These needfast tracking and Flour has the capability."

IVA38065 writes, "Fluor (FLR) - track record, resources & marketing."

HIG19963 writes, "GE - passenger rail electric upgrades, electric grid."

DAV90905 writes, "GE, due to world presence, including China, India etc, wherestimulus will build out China etc."

44008937 writes, "Granite Construction (GVA) will get most of the local highway

projects hitting the streets in the next 6 months."

IRV96319 writes, "Granite (GVA) - based in CA where a lot of the money will go."

JON82044 writes, "I think Bombardier will do very well with their focus on light rapidtransit, and short haul aircraft."

DAV3956 writes, "Nucor (NUE) - low cost producer."

RIC4676 writes, "Nucor (NUE) - provides specialty steel to bridges, alternative energy,mass transit, etc."


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GEO98215 writes, "URS - broadly diversified."

JAS37448 writes, "URS - strong in roadway/highway design & construction."

JP195429 writes, "US Steel because of the ban on the use of imported steel and theincreasing need for steel."

(B) Electricity/Smart Grid Infrastructure

Respondents Involved With Electricity Grid Infrastructure (n = 134)

A series of questions were also posed to 134 respondents working for companies involved inU.S. Electricity/Smart Grid infrastructure projects.

Here are the Electricity and Smart Grid Infrastructure areas that respondents think will seethe most and least growth in spending over the next 12 months:

Power Lines (+26) are expected to see the strongest growth over the next 12 months. ControlSystems (+13) including generators, switches and circuit breakers are also seen asperforming well.

Heres another look at the data:

Over the next 12 months, which of the following Electricity Grid Infrastructure sub-sectors do you think will see the most growth in spending?

Power Lines 36%Control Systems (i.e. generators, switches, circuit breakers) 22%Communications Systems (i.e. microwaves, optical fibers) 14%Transformers 4%Cables 3%None Will Experience a Growth in Spending 4%Dont Know / Other / No Answer 14%


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And which of the following U.S. Electricity Grid Infrastructure sub-sectors do you thinkwill see the least growth in spending over the next 12 months?

Transformers 16%Communications Systems (i.e. microwaves, optical fibers) 16%Cables 15%Power Lines 10%

Control Systems (i.e. generators, switches, circuit breakers) 9%Dont Know / Other / No Answer 32%

Net Difference Score

MostGrowth

LeastGrowth

NetDifference

ScorePower Lines 36% 10% +26Control Systems (i.e., generators, switches, circuit breakers) 22% 9% +13Communications Systems (i.e., microwaves, optical fibers) 14% 16% -2Transformers 4% 16% -12Cables 3% 15% -12

In terms of the smart grid, Smart Meters and Meter Infrastructure (+36) are seen asexperiencing the most growth over the next year as is clear in the chart below:

Which specific Smart Grid technologies do you think will experience the most growthin spending over the next 12 months?

Smart Meters / Meter Infrastructure 37%Transmission Infrastructure 18%Smart Components & Power Electronics 7%Consumer Demand Monitoring and Management 7%Smart Sensors 6%Smart Demand Response 4%Smart Protection Gear 1%None Will Experience a Growth in Spending 2%Dont Know / Other / No Answer 18%


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And which specific Smart Grid technologies do you think will experience the leastgrowth in spending over the next 12 months?

Consumer Demand Monitoring and Management 19%Transmission Infrastructure 18%Smart Protection Gear 13%Smart Components & Power Electronics 7%

Smart Demand Response 4%Smart Sensors 3%Smart Meters / Meter Infrastructure 1%Dont Know / Other / No Answer 34%

Net Difference Score Current Survey (Mar 09)

MostGrowth

LeastGrowth

NetDifference

ScoreSmart Meters / Meter Infrastructure 37% 1% +36Smart Sensors 6% 3% +3Transmission Infrastructure 18% 18% 0Smart Components & Power Electronics 7% 7% 0Smart Demand Response 4% 4% 0Consumer Demand Monitoring and Management 7% 19% -12Smart Protection Gear 1% 13% -12

Respondents again believe the Federal Government would experience the largest increasesin spending.

Over the next 12 months, do you think spending on Electricity Grid Infrastructureprojects within each of the following U.S. sectors will increase, decrease, or willspending remain the same compared to the previous 12 months?

SignificantIncrease

inSpending

SlightIncrease

inSpending

Remainthe

Same

SlightDecrease

inSpending

SignificantDecrease

inSpending

Don'tKnow

FederalGovernment

43% 34% 9% 1% 0% 13%StateGovernment 16%

25% 28% 10% 3%

17%

Private Sector 15% 39% 18% 10% 4% 15%LocalGovernment

9% 23% 34% 13% 3% 18%


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Key Barriers

Industry respondents find Not-In-My-Back-Yard issues (NIMBY; 43%) to be the number onebarrier to upgrading the U.S. electricity grid. In other words, while the public wants electricitydelivered to their homes they dont want power lines in their back yard.

What do you think are the biggest barriers to bringing the U.S. Electricity Grid

Infrastructure up to 21st century standards?(Choose No More Than Two)

CurrentSurveyMar 09

NIMBY (Not-In-My-Back-Yard) Issues 43%Too Much Bureaucracy 41%Not Enough Funding 37%Land/Property Issues 16%Lack of Public Interest 9%Legal Issues 9%

Other 14%Other important barriers include Too Much Bureaucracy (41%) and Not Enough Funding(37%).

Companies to Watch

Multinational conglomerates General Electric (GE) and Siemens AG (SI) are of courseintegral suppliers for major energy infrastructure projects. Though a relatively small part oftheir sales involve the U.S. electricity grid, both companies will be top beneficiaries of federalstimulus funding, according to industry respondents.

ABB Ltd. (ABB) and EMCOR Group (EME), two companies extremely active in electricitytransmission and distribution projects, are expected to get a significant boost from increasedU.S. government spending in these areas.

ABB products and services focus on transmitting and distributing electricity. "ABB is a bigbeneficiary due to their large global presence and diversity of product offerings to utilities,"one industry respondent points out. As an infrastructure client of ABB puts it, "ABB sells anddoes almost everything we want, where we want it, when we want it."

EMCOR Group a leader in mechanical and electrical construction and energy infrastructure was also cited by respondents. EME combines its expertise and services with a broad

national footprint that should enable it to quickly mobilize for projects generated by thestimulus plan.

In terms of the Smart Grid, Johnson Controls (JCI) and Itron (ITRI) appear best positioned with Itron having the added advantage that a major portion of its business focuses on SmartMeters and Meter Infrastructure for electric utilities.


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Which one Electricity Grid Infrastructure company do you think will benefit most?Please mention why.

Sample of Responses

CRA58411 writes, "ABB - they sell and do almost everything we want, where we wantit, when we want it."

DSC99362 writes, "ABB will see the best benefit due to their large global presenceand diversity of product offerings to the utility industry."

CLI94984 writes, "Eaton Corp. (ETN) since it has a full line of new products needed tobring updated safety, control, and monitoring of the electric power grid."

SAM82266 writes, "Eaton (ETN) - strong coverage of commercial, institutional,government markets."

RAN92075 writes, "EMCOR Group (EME) - product line."

RIC10260 writes, "GE - access to capital through GE Capital is important in a tight-credit environment."

GIG97798 writes, "GE - Buy American and their wide range of products - once projectsbecome clearly defined."

DOL37209 writes, "GE - Over time, as alternative sources of energy increase, e.g.wind and solar, we will move from a system with relatively few central generatingstations to one with many dispersed power sources feeding the grid. On the demandside it will be necessary to implement more sophisticated load management, loadcontrol and also possibly energy storage. GE has the breadth and depth of technologyand expertise to address these challenges and opportunities."

DAD09079 writes, "GE has a good entry at several areas, broad participation plus theymay contribute to some pre-planning with government entities."

BOB09953 writes, "Nature's Power Co. - 100% alternative energy and newtransmission system."

RCO5926 writes, "Quanta Services Inc (PWR) are involved with all aspects of the griddevelopment - Transmission, Substation, Distribution, plus some Smart Grid, and theyalso have an extensive national representation and good reputation."

DJH08346 writes, "Rockwell Automation (ROK) - industry leading controls equipment."

BRA04038 writes, "Serveron - part of BP Global."

JIM94736 writes, "Siemens (SI) is a full-line supplier to the utilities."

DSP48927 writes, "URS (URS) and Black & Veatch - permitting & plans. They do frontend work on stimulus projects & local environmental firms."


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AMA04519 writes, "Woodward Governor (WGOV) - Hydro generation has many oldpower plants and requires routine maintenance. There are not many companies outthere that manufacture/maintain governors which is a major piece of equipment withingeneration. One could consider it a niche market."

MIG04410 writes, "Xcel Energy (XEL) - Centrally situated in the wind corridor and

capable of owning and maintaining a significant portion of the grid improvements. Also,Xcel is a big purchaser of renewable energy. They have made some really gooddecisions in that area."

(C) Broadband Network Infrastructure

Respondents Involved With Broadband Network Infrastructure (n = 173)

Another sector focused on in the survey was Broadband Network Infrastructure.

A series of questions were posed to 173 respondents working for companies involved in U.S.broadband infrastructure projects and while they didnt find this sector benefiting as much inthe short-term, its seen as an important U.S. investment over the next few years.

Fiber to the X (FTTx; +15) and WiMax (+12) are the broadband network project areasexpected to see the most growth in spending over the next year.


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Over the next 12 months, which of the following Broadband Network Infrastructuresub-sectors do you think will see the most growth in spending?

Fiber To The X (FTTx) 20%WiMax 18%Broadband Loop Carriers / Multi-service Access Nodes 11%Municipal Networks 8%

Wireless LAN 6%Access Technologies 5%Access Equipment 4%Passive Optical Networks (PONs) 4%Satellite 3%Cable Modem Termination Systems (CMTSs) 2%DSL 2%None Will Experience a Growth in Spending 5%Dont Know / Other / No Answer 12%

And which of the following U.S. Broadband Network Infrastructure sub-sectors do youthink will see the least growth in spending over the next 12 months?

Satellite 21%DSL 20%Municipal Networks 9%Cable Modem Termination Systems (CMTSs) 7%WiMax 6%Fiber To The X (FTTx) 5%Broadband Loop Carriers / Multi-service Access Nodes 3%Wireless LAN 3%

Access Equipment 2%Passive Optical Networks (PONs) 2%Access Technologies 0%Dont Know / Other / No Answer 23%Net Difference Score

MostGrowth

LeastGrowth

NetDifference

ScoreFiber To The X (FTTx) 20% 5% +15

WiMax 18% 6% +12Broadband Loop Carriers / Multi-service Access Nodes 11% 3% +8Access Technologies 5% 0% +5Wireless LAN 6% 3% +3Passive Optical Networks (PONs) 4% 2% +2Access Equipment 4% 2% +2Municipal Networks 8% 9% -1Cable Modem Termination Systems (CMTSs) 2% 7% -5DSL 2% 20% -18Satellite 3% 21% -18


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Once again, respondents believe Federal Government spending will see the most increasesin spending.

Over the next 12 months, do you think spending on Broadband Network Infrastructureprojects within each of the following U.S. sectors will increase, decrease, or willspending remain the same compared to the previous 12 months?

SignificantIncrease

inSpending

SlightIncrease

inSpending

Remainthe

Same

SlightDecrease

inSpending

SignificantDecrease

inSpending

Don'tKnow

FederalGovernment

30% 36% 16% 4% 1% 13%

StateGovernment

8% 30% 27% 14% 8% 13%

LocalGovernment

6% 28% 30% 17% 6% 12%

Private Sector 12% 36% 22% 15% 6% 9%

Key Barriers

As we found with our other sectors, Not Enough Funding (55%) and Too Much Bureaucracy(50%) are considered major roadblocks for bringing U.S. broadband infrastructure up to 21stcentury standards.

What do you think are the biggest barriers to bringing the U.S. Broadband NetworkInfrastructure up to 21st century standards? (Choose No More Than Two)

CurrentSurveyMar 09

Not Enough Funding 55%Too Much Bureaucracy 50%Lack of Public Interest 12%Technological Limitations 12%Legal Issues 10%Land/Property Issues 8%Don't Know 3%Other 8%


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Companies to Watch

Cisco (CSCO) is of course the company to watch here, but Corning (GLW) also receivedmention from our industry respondents.

Cisco basically owns the industry standards, its competition is shrinking, and it has thestrongest strategic partnerships and billions in savings. It handles the high-margin plumbing,

while network providers compete for the low-margin direct to consumer business.

Corning is a major supplier of optical fiber, cable and hardware for the telecommunicationsindustry. This segment, representing 30% of the companys sales, should benefit from thebroadband network build-out over the next 12 months according to the survey results.

Which one Broadband Network Infrastructure company do you think will benefit most?Please mention why.

CUN13828 writes, "Alcatel-Lucent (ALU) has broadest product base."

KCK21845 writes, "Alcatel-Lucent (ALU) - they have their hands in multiple 'pies'considering the several broadband technology options."

KEV58677 writes, "AT&T (T) - They are building out 3G wireless network and will befinished in Southern California 1Q 2010. Verizon (VZ) is behind."

CON85510 writes, "AT&T (T) - due to more variety of service offering and loweringtheir monthly package subscription. Money is tight and people are looking to lowertheir cost of accessing TV, modem and phone service."

EDG96105 writes, "Ciena (CIEN) has quietly consolidated a lot of key technologies."

JAS40738 writes, "Cisco (CSCO) basically owns the industry standards, itscompetition is shrinking, and it has the strongest partnerships and billions in savings. Ithandles the high-margin plumbing, while network providers compete for the low-margin direct to consumer business."

DOL37209 writes, "Cisco (CSCO) - Arms merchant to almost the all the otherparticipants."

MAT9449 writes, "Cisco (CSCO) - Great equipment and support. Seems to have alock as preferred provider in many areas."

GIG97798 writes, "Cisco (CSCO) - most diverse footprint - is well positioned in bothconsumer and service provider sides."

DAV94761 writes, "Cisco (CSCO) - is positioning their products to work with everycompany's equipment so they will dominate."

DLO0787 writes, "Cisco (CSCO) - It's all about bringing Ethernet to the consumerhome. Cisco owns the Ethernet world and stands the most to win."


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ARP47488 writes, "Clearwire (CLWR) - they have the infrastructure in place and justneed to integrate it and convince the public it is a better alternative."

DAN17494 writes, "Corning (GLW) - supplier of fiber cable and passive components tobiggest majority of projects."

JMT94035 writes, "Corning (GLW) - because of the need for fiber optic cabling."

GRA09983 writes, "D-Link Systems because they have an IPv6 ready CustomerPremises Unit available now."

DRD12640 writes, "Dycom (DY) - They are well positioned to take advantage of thebroadband boom, both from the engineering and construction standpoint."

MZF09988 writes, "Harris (HRS) - will continue to do well with life cycle replacementsand updates to its Federal Systems Customers."

XPF99689 writes, "Mas Tec (MTZ) - highly connected subcontractor."

CIM10101 writes, "Motorola (MOT) because of their Canopy products enabling smallcompanies to serve broad band to remoter locations."

LAR04472 writes, "Motorola (MOT) - will get its act together. Has great engineering."

AMA28871 writes, "Nortel (NT) - It has knowledge and technology."

KRI03894 writes, "Occam (OCNW) - most of the money is going to rural and they

dominate that along with Calix."

LML96438 writes, "Qualcomm (QCOM) due to licensed IP throughout entire wirelessecosystem."

JAC04546 writes, "Qwest (Q) due to their private and public contracts."

JJD89195 writes, "Verizon (VZ) because they have already made the investment intoupgrading the infrastructure and the technology of the terminal equipment is growingquickly."


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II. ChangeWave Research Methodology

This report presents the findings of a recent ChangeWave survey focusing on infrastructureprojects. The survey was conducted between March 12-17, 2009, and a total of 409respondents working for companies involved in infrastructure projects participated.

ChangeWave's proprietary research and business intelligence gathering system is basedupon the systematic gathering of valuable business and investment information directly overthe Internet from accredited members.

The Research Network is assembled from senior technology and business executives inleading companies of select industries. Nearly 3 out of every 5 members (56%) haveadvanced degrees (e.g., Master's or Ph.D.) and 93% have at least a four-year bachelor'sdegree.

The business and investment intelligence provided by ChangeWave provides a real-timeview of companies, technologies and business trends in key market sectors, along with an in-depth perspective of the macro economy well in advance of other available sources.

III. About ChangeWave Research

ChangeWave Research, a subsidiary of InvestorPlace Media, LLC, identifies and quantifies"change" in industries and companies through surveying a network of thousands of businessexecutives and professionals working in more than 20 industries.

The ChangeWave Research Network is a group of 20,000 highly qualified business,technology, and medical professionals as well as early adopter consumers who work in

leading companies of select industries. They are credentialed professionals who spend theireveryday lives on the frontline of technological change. ChangeWave surveys its Networkmembers weekly on a range of business and consumer topics, and converts the informationinto a series of proprietary quantitative and qualitative reports.

ChangeWave delivers its products and services on the Web at www.ChangeWave.com.

ChangeWave Research does not make any warranties, express or implied, as toresults to be obtained from using the information in this report. Investors shouldobtain individual financial advice based on their own particular circumstances beforemaking any investment decisions based upon information in this report.

For More Information:

ChangeWave Research Telephone: 301-250-22009201 Corporate Blvd. Fax: 301-926-8413Rockville, MD 20850 www.ChangeWave.comUSA [email protected]

Helping You Profit From A Rapidly Changing World

US Infrastructure Industry Spending Trends - 30th April 09[1]

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