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DSL/vectoring/G.fast

Adtran Feels Q4 Squeeze

Broadband equipment vendor Adtran has flagged dips in net income and revenues for the October-to-December quarter owing to an expected drop in network spending by US operators.

The company's sales fell by 9.5%, to $144 million, compared with the final quarter of 2013, while its net income was down by 21.5%, to $9.3 million, over the same period.

Earnings per share came in at $0.19 (on a non-GAAP basis), down from $0.25 in the year-earlier quarter, and were seemingly boosted by some one-offs, according to analyst firm Jefferies, including a lower tax bill than Adtran Inc. (Nasdaq: ADTN) had been anticipating and the "settlement of working capital items" relating to a transaction that closed in 2012.

That appears to be Adtran's acquisition of Nokia Networks ' broadband business -- a deal announced at the tail end of 2011. (See Adtran to Buy NSN's Broadband Unit.)


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CEO Tom Stanton said the company had either met or just beaten expectations in most of its operating segments in the final part of the year. "We continue to see positive trends as we enter 2015 and believe our geographic presence, market share gains and new product introductions position us well for the future," he said in a company statement.

The numbers were roughly in line with Wall Street's expectations.

Adtran is due to hold a conference call with analysts Wednesday when it plans to shed further light on the results.

Even so, Stanton's initial sentiments may offer a modicum of encouragement given the tough conditions, with US operators cutting their investments in network equipment. Vendors including A10 Networks Inc. , Juniper Networks Inc. (NYSE: JNPR), Spirent Communications plc and EZchip Technologies Ltd. (Nasdaq: EZCH) have all taken flak in the last few months because of the slowdown. (See Cisco Busts Slump Despite Carrier Slowdown, Turmoil at Juniper as CEO Quits and A10 Latest Victim of Carrier Spend Slowdown.)

Adtran is certainly not out of the woods, though. According to the team at Jefferies, its business at CenturyLink Inc. (NYSE: CTL), a major Adtran customer, is under pressure, while the market for HDSL equipment, in which Adtran is active, is still showing signs of "softness". The timing of new business at AT&T Inc. (NYSE: T) might also be a cause for concern.

The vendor's share price ended Tuesday at $23.05. Its results were published after the markets closed so investor reaction to Adtran's latest financials will be reflected in Wednesday trading.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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