Adtran Cranks Up the Volume
The company announced late Tuesday that it is now expecting to earn 38 cents a share to 40 cents a share on revenues of between $143 million and $147 million for its third quarter of 2005.
In July, Adtran management was expecting to earn between 29 cents and 31 cents a share on revenues of between $128 million and $130 million.
Yesterday the company also boosted its full year 2005 revenue guidance. It now expects to earn between $1.18 and $1.22 a share on revenues of $503 million to $511 million. Earlier, the company guided analysts to expect revenues to be in the $480 million to $485 million range.
Adtran didn't offer much in the way of an explanation, noting in a statement that its "bookings have been stronger than anticipated in both primary growth and traditional areas."
Analysts interpret that as meaning the company is selling more access equipment. "We believe strength was broad-based but more concentrated in new product areas," writes Nikos Theodosopoulos, an analyst at UBS AG. "In particular we expect ADTRAN saw strength in outside plant DSLAMs and optical access as new RBOC contracts began contributing to revenues."
Some analysts had previously had been down on the company, citing its relative weakness in fiber access technology. But apparently the crush of competition from cable operators is causing just as much DSL equipment investment as ever.
That being said, some are looking for some not so great news as Adtran finishes out the year. "It's possible that some of the Q3 upside in Verizon/SBC outside plant DSLAM business may have been initial stocking orders," writes George Notter of Jefferies & Co. Inc. "If so, we wouldn’t be surprised to see overall business decline Q/Q in Q4."
— Phil Harvey, News Editor, Light Reading