Adtran suffers a decline in sales and profits but marginally beats expectations in tough conditions.

Iain Morris, International Editor

January 21, 2015

2 Min Read
Adtran Feels Q4 Squeeze

Broadband equipment vendor Adtran has flagged dips in net income and revenues for the October-to-December quarter owing to an expected drop in network spending by US operators.

The company's sales fell by 9.5%, to $144 million, compared with the final quarter of 2013, while its net income was down by 21.5%, to $9.3 million, over the same period.

Earnings per share came in at $0.19 (on a non-GAAP basis), down from $0.25 in the year-earlier quarter, and were seemingly boosted by some one-offs, according to analyst firm Jefferies, including a lower tax bill than Adtran Inc. (Nasdaq: ADTN) had been anticipating and the "settlement of working capital items" relating to a transaction that closed in 2012.

That appears to be Adtran's acquisition of Nokia Networks ' broadband business -- a deal announced at the tail end of 2011. (See Adtran to Buy NSN's Broadband Unit.)

For more fixed broadband market coverage and insights, check out our dedicated broadband content channel here on Light Reading.

CEO Tom Stanton said the company had either met or just beaten expectations in most of its operating segments in the final part of the year. "We continue to see positive trends as we enter 2015 and believe our geographic presence, market share gains and new product introductions position us well for the future," he said in a company statement.

The numbers were roughly in line with Wall Street's expectations.

Adtran is due to hold a conference call with analysts Wednesday when it plans to shed further light on the results.

Even so, Stanton's initial sentiments may offer a modicum of encouragement given the tough conditions, with US operators cutting their investments in network equipment. Vendors including A10 Networks Inc. , Juniper Networks Inc. (NYSE: JNPR), Spirent Communications plc and EZchip Technologies Ltd. (Nasdaq: EZCH) have all taken flak in the last few months because of the slowdown. (See Cisco Busts Slump Despite Carrier Slowdown, Turmoil at Juniper as CEO Quits and A10 Latest Victim of Carrier Spend Slowdown.)

Adtran is certainly not out of the woods, though. According to the team at Jefferies, its business at CenturyLink Inc. (NYSE: CTL), a major Adtran customer, is under pressure, while the market for HDSL equipment, in which Adtran is active, is still showing signs of "softness". The timing of new business at AT&T Inc. (NYSE: T) might also be a cause for concern.

The vendor's share price ended Tuesday at $23.05. Its results were published after the markets closed so investor reaction to Adtran's latest financials will be reflected in Wednesday trading.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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