Capex Crunch Cuffs Adtran

The carrier capex crunch finally caught up with Adtran Inc. (Nasdaq: ADTN) during the first few months of 2012, leading the vendor to revise its first-quarter revenues and earnings estimates early Thursday.

The access equipment specialist had weathered the spending slowdown storm that hit many other equipment suppliers during the final months of 2011 and had posted very respectable fourth-quarter numbers. (See Adtran Shows Its Mettle.)

During its fourth-quarter and full-year earnings conference call on Jan. 18, CFO Jim Matthews said first-quarter revenues were expected to be about the same as the fourth quarter's US$175.3 million.

However, the company is now anticipating revenues for the first three months of 2012 to be in the $130 million to $135 million range, or $40 million to $45 million lower than previously expected, while earnings after one-time and other costs (also known as non-GAAP earnings) are now expected to be between 22 and 25 cents.

Financial analysts had, on average, been expecting revenues of $174.7 million and non-GAAP earnings of 44 cents.

So wassup?

In Thursday's announcement, CEO Tom Stanton said: "Two issues impacted us in the first quarter. The first was a slower than normal start to the seasonal buying pattern at some of our carrier customers. The second, which had a greater impact, was a delay in both the start and ramp of orders from a carrier customer due to new system implementations."

But he believes the worst is over. "Order rates for the month of March have substantially improved and we are encouraged that the prior slowdown that we experienced is behind us."

As the U.S. trading community gets to work there doesn't appear to be too much anxiety about Adtran's announcement, as the stock is actually trading up by 0.7 percent at $31.40 in pre-market trading.

— Ray Le Maistre, International Managing Editor, Light Reading

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