ADTRAN Inc. (ADTN): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
ADTRAN posted mixed financial results for the first quarter of 2014. Meanwhile, the company continues to perform well owing to strong contributions from the U.S., Europe, the Middle East, Africa and Latin America. ADTRAN has stabilized its businesses with the Tier 1 carriers and has also won contracts from Tier 2 and Tier 3 carriers. We expect the company to benefit from market share gain, strong growth of core products, solid international sales and growing service revenues. However, global macroeconomic fluctuations, foreign currency risk and stiff competition may act as headwinds for ADTRAN moving ahead. Moreover, the stock price is currently trading at the high-end of its 52-week price range and is fairly valued at current levels. Therefore, we maintain our long term Neutral recommendation on ADTRAN.

Overview:

Based in Huntsville, AL, ADTRAN Inc. designs, manufactures, markets and services network access solutions for communication networks. The company develops, markets and supports high-speed network access solutions for use across Internet protocol (IP), asynchronous transfer mode (ATM) and time division multiplexed (TDM) architectures in both wireline and wireless network applications. Its solutions are used to deploy new broadband networks and upgrade slower, established networks using copper, fiber, and wireless technologies both in the United States and abroad.

ADTRAN maintains two operating divisions based on its product and service offerings: the Carrier Networks Division and the Enterprise Networks Division. The Carrier Networks Division provides products used by service providers to deliver voice, data and video services from their equipment, to a customer's premise, irrespective of its location either at a central office or at a remote terminal. This division accounted for 79.3% of the total revenue in 2012. ADTRAN's Enterprise Networks Division provides products used by enterprise customers to construct voice, data and video networks within the customer's site or among distributed sites. This division accounted for the remaining 20.7% of the total revenue in 2012.

The company's three major product categories are Carrier Systems, Business Networking and Loop Access.

Carrier Systems includes broadband access products comprising Total Access (TA) 5000 multi-service access and aggregation platform products, Total Access 1100/1200 Series of Fiber-To-The-Node (FTTN) products, Digital Subscriber Line Access Multiplexer (DSLAM) products, and Optical Access products.

Business Networking includes Internetworking products, Optical Network Terminals (ONTs), and Integrated Access Devices (IADs). Internetworking products consist of Total Access IP Business Gateways and NetVanta product lines that include multi-service routers, managed Ethernet switches, IP Private Branch Exchange (PBX) products, IP phone products, Unified Communications solutions, and Carrier Ethernet Network Terminating Equipment.

Loop Access includes products such as Digital Data Service (DDS) and Integrated Services Digital Network (Total Reach) products High bit-rate Digital Subscriber Line (HDSL) products including Total Access 3000 HDSL and Time Division Multiplexed-Symmetrical HDSL (TDM-SHDSL) products, T1/E1/T3, Channel Service Units/Data Service Units, and TRACER fixed wireless products.

In addition, ADTRAN identifies sub-categories of product revenues, which are divided into growth products, representing its primary growth areas and traditional products. The company's growth products consist of Broadband Access, Optical Access products (both included in Carrier Systems) and Internetworking products (included in Business Networking) and traditional products include HDSL products (included in Loop Access) and other products.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: IP , TA , FTTN , DDS , ADTN

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