Adtran Expects Flat Carrier Spending

Adtran Inc. (Nasdaq: ADTN) is providing another sign that telecom wireline spending is weakening as 4G spending increases.

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

paolo.franzoi 12/5/2012 | 5:28:08 PM
re: Adtran Expects Flat Carrier Spending


So, does this say anything about the Ethernet over Copper Market?  If (one assumes) that CAPEX for Wireless is still high that would imply that CAPEX for Wireless Backhaul is still high.  Given that Adtran really only has a position via bonded copper of any significance (okay and HDSL), does that say anything about how people are driving wireless backhaul?



Pete Baldwin 12/5/2012 | 5:28:08 PM
re: Adtran Expects Flat Carrier Spending

Everybody into the pool... Calix is now pre-announcing its Q2, saying revenues will be $79M (vs. $93M-97M guidance) and non-GAAP earnings of 4 cents (vs. 7-11 cents guidance).  Citing slow capex caused by concerns about the economy and the regulatory environment.

Calix stock was down 10% today and looks like it's down another 30% after-hours.

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