Adtran Expects Flat Carrier Spending
The company missed earnings forecasts for its second quarter, which ended June 30, citing a "heightened sense of cautiousness and budget insecurity among large and small carriers," CEO Tom Stanton said on Wednesday morning's earnings call.
He did say carriers are talking about projects being delayed, but not completely canceled. But sticking to Adtran's usual conservative stance, Stanton isn't banking on carriers making up their wireline spending later on.
"'Accelerated spending in the second half' is what I think the verbiage is, but that's something we're not counting on ourselves," he said.
Adtran reported second-quarter revenues of $184 million and net income of $21.1 million, or 33 cents per share. Analysts polled by Thomson Reuters had expected revenues of $190 million.
Non-GAAP earnings of 38 cents per share beat the analyst consensus by 3 cents.
Adtran's forecast for the third quarter wasn't good, either. The company expects revenues to equal, or maybe slightly exceed, the $184 million of the second quarter, whereas analysts were expecting $222 million.
Adtran is saying the problem comes from cautious attitudes at carriers and enterprises, but it could also be a sign that carrier spending is tilting towards 4G wireless and away from wireline. Analyst George Notter of Jefferies & Company Inc. predicted this earlier, and last week's earnings warning from Acme Packet Inc. (Nasdaq: APKT) seemed to bear that out. (See Acme Packet Points to Capex Weakness and US Carrier Capex: Wireless Squeezing Wireline.)
Adtran shares were down $3.92 (14%) at $23.27 in mid-morning trading Wednesday.
— Craig Matsumoto, Managing Editor, Light Reading