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Adtran Holds Firm, Grows in Q3

Access equipment vendor Adtran Inc. (Nasdaq: ADTN) defied the odds during its third quarter, reporting late on Monday a year-on-year and sequential increase in revenues that exceeded analysts' expectations and announcing a cash dividend of $0.09 per share for the quarter.

But having seen its stock rise by more than 7 percent to $19.38 Monday, the vendor's share price took a near 4 percent hit to $18.65 in pre-market trading Tuesday morning as the company hinted that the current macro economic turmoil had started to impact its business during September.

Adtran reported third quarter sales of $137.2 million, up 11 percent compared with a year earlier and slightly better than the second quarter's $131 million. Analysts, on average, had expected revenues of $135.9 million.

The vendor's third quarter net income was $22.4 million for an EPS (earnings per share) of $0.35, in line with analysts' expectations, but slightly better than the $21.5 million and $0.31 reported a year earlier.

While those numbers showed no sign of the slowdown that had loomed a few months back, the company did, however, note in its earnings release that "economic uncertainty affected us during the latter part of the quarter." (See Adtran Hints at Slowdown.)

And with nearly all of its revenues coming from North American customers, and about 80 percent of its sales generated by network operators (with about 20 percent from enterprise customers), it would be surprising if Adtran wasn't affected by the capex caution that has impacted other equipment firms that rely on U.S. service providers. (See As Sonus Shrinks, AudioCodes Stays Firm, Ciena CEO: Slowdown Looks Shortlived, Embarq Cuts Its Way to Growth, CDMA, Charges Knock Nortel, and Qwest CEO Says Cost Cutting Will Continue.)

Still, the company noted increasing sales of its broadband access, optical access, and internetworking (enterprise access) products, and believes its portfolio and corporate controls will keep it from major problems as the North American telecom sector and the economy in general re-adjust.

"While the industry is facing uncertainty in the near term, we believe our strong operating metrics combined with the long-term opportunities in our growth areas place us in a solid position," stated CEO Tom Stanton in the vendor's earnings release.

Adtran is holding an investor conference call today (Tuesday) at 9:30 a.m. Central/10:30 a.m. Eastern.

— Ray Le Maistre, International News Editor, Light Reading

paolo.franzoi 12/5/2012 | 3:29:32 PM
re: Adtran Holds Firm, Grows in Q3
Adtran is not part of U-Verse.

This represents either Qwest or Embarq. They are struggling mightily at Embarq to overbuild existing equipment. Could be that Qwest has blown their budget this year.

seven
Honestly 12/5/2012 | 3:29:32 PM
re: Adtran Holds Firm, Grows in Q3 This paragraph is a quote from Adtran's earnings call Monday.

Could this be a slowdown at ATT with U-Verse and is it linked to credit issues and the bank issues in the US.?

"We did however see a decline in Fibre-To-The-Node revenues at a large Tier 1 domestic carrier. We believe this decrease is temporary and part of a longer term phased roll out deployment. We anticipate reacceleration of shipments to this carrier beginning in early 2009."
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