ADVA Optical Networking today announced record revenues for its first quarter, thanks to strong metro WDM and enterprise demand. (See ADVA Reports Earnings.)

For the first quarter of 2007, ADVA reported a profit of €1.4 million (US$1.9 million), or €0.03 per share, on revenues of €68.7 million ($93.03 million). That was compared with earnings of €3.0 million ($4.06 million), or €0.08 per share, on sales of €37.1 million ($50.2 million) during the previous year's first quarter.

First-quarter revenues were up 12 percent from fourth-quarter 2006 sales of €61.3 million ($83.0 million). Sales were boosted by the company's acquisition of Movaz Networks, which was completed in the second half of 2006. (See ADVA Completes Movaz Buy, ADVA to Marry Movaz, and ADVA Buys Movaz.)

Pro forma gross margins for the quarter rose to 43.6 percent, up from 39.8 percent in the fourth quarter of 2006. Gross margins increased partly due to product mix, lower inventory depreciation, and the arrival of Movaz.

ADVA's sales for the quarter marked an all-time high and the 13th consecutive quarter of sequential revenue growth.

There's a bit of a downside, though: Due to strong revenues in the first quarter, ADVA is projecting second-quarter revenues will drop to €66 million ($89.4 million). This includes a lower revenue contribution from one major distribution channel. ADVA increased its full-year 2007 revenue forecast from €260 million ($352 million) to €267 million ($361.5 million), however.

ADVA touted strength in its metro WDM business, where it outperformed the market, according to a market share study released by Ovum RHK Inc. According to that report, ADVA's worldwide market share grew to 12 percent in 2006, from 11 percent in the prior year. ADVA also pointed to a study by Infonetics Research Inc. that showed it owned 30 percent of the metro Ethernet access device market for 2006.

The company's results follow a series of contract announcements in the quarter, including wins at BT Group plc (NYSE: BT; London: BTA), Deutsche Telekom AG (NYSE: DT) division T-Com , the Viola research product, and Exponential-e Ltd. (See ADVA Lands 21CN Deal, ADVA Wins BT 21CN Deal, ADVA Wins DT Deal, ADVA Helps Viola, and Exponential-e Deploys ADVA.)

Notable among ADVA's wins was its selection as supplier of last-mile access products for BT's 21st Century Network (21CN) project. BT will deploy products from ADVA's FSP 150, which was updated in March to provide service demarcation, service-level agreement (SLA) monitoring, and advanced remote operations, administration, and maintenance (OAM) functionality. (See ADVA Does Ethernet Demarc.)

ADVA officials are predicting the company's market for optical WDM and Ethernet access solutions for metro networks would grow by 20 to 25 percent in 2007.

"ADVA is serving markets that are going through a significant shift from legacy solutions to next-generation networks. Our addressable market is growing by about 20 percent per year," CEO Brian Protiva said on a conference call with analysts.

— Ryan Lawler, Reporter, Light Reading