Adtran Heralds a Tough Winter
The company issued a short note to investors Wednesday, stating: "Typical seasonality combined with the current telecom equipment spending environment may lead to a 'teens' percentage point sequential decrease in revenues for the fourth quarter of 2012 from the third quarter."
Given that the third quarter's revenues are set to come in at US$162 million (the full report is due on Oct. 10), a sequential "teens" decrease (13-19 percent) would pitch fourth-quarter revenues in the range of about $131 million to $141 million. On average, analysts polled by Thomson Reuters had been expecting $175.7 million.
In the fourth quarter of 2011, Adtran reported revenues of $175.3 million. (See Adtran Shows Its Mettle.)
In a research note issued late Wednesday, Raymond James Financial Inc. (NYSE: RJF) analyst Simon Leopold described the announcement as "shocking," adding that Adtran's "challenges may extend beyond the broad based slowdown in carrier spending."
In addition to various pressures in the U.S. -- most notably a degree of uncertainty around AT&T Inc. (NYSE: T)'s fixed broadband spending and a shift at major customer CenturyLink Inc. (NYSE: CTL) towards rival Calix Inc. (NYSE: CALX) -- Leopold believes the vendor may have been hit by a slowdown in orders from Teléfonos de México (Telmex) .
The news knocked 4.3 percent off the value of Adtran's stock in Wednesday afternoon trading. It finished the day at $16.38.
In the wake of its latest financial warning, the vendor unveiled a new product, ActivReach, Thursday morning. The company says the product is "the industry’s first Ethernet technology to support all grades of wiring, extend service reach over three times beyond the limits of standard Ethernet and deliver high-speed voice, data and Power over Ethernet (PoE) all from a single device." Adtran will be pitching ActivReach to service providers and enterprises as an integrated element in its NetVanta1535P Gigabit Ethernet switch.
— Ray Le Maistre, International Managing Editor, Light Reading