A leading provider of network solutions,
), achieved another milestone in cloud based technologies by
unveiling the first ever cloud-based Mobile Data Offload solution
for cellular companies. The technology is based on Hotspot 2.0
specification of Wi-Fi Alliance that provides users with easy
access to public Wi-Fi networks.
Given an upsurge in mobile data traffic, data offloading
solutions can be defined as the need of the hour. ADTRAN's
cloud-based Mobile Data Offload technology offers a unique solution
that not only helps in reducing data traffic but also minimizes the
cost of maintaining complex network infrastructure.
The company's latest solution is capable of targeting various
spheres of network congestion including cellular backhaul, Radio
Access Network and enterprise access. It combines advanced
virtual wireless LAN (vWLAN) with mobile backhaul solution for
integration into any network architecture and provides seamless
The deployment of such a solution by carriers would imply
long-term benefits by minimizing investment over LTE network
infrastructure. Further, it provides an option to identify network
capacity requirements and determine which data traffic to offload
so as to maximize mobile data profitability.
We believe that the rise in global broadband deployment,
intensive upgrade of mobile infrastructure and channel expansion in
the Enterprise segment are the key factors driving ADTRAN's
innovative and diverse product portfolio. The company has already
benefited from its three main growth products, namely Broadband
Access, Optical Access and Internetworking that represent
approximately 78% of its total revenue.
Further, we expect broadband stimulus, Total Access 5000,
fiber-to-the-node platforms, incremental international sales,
growing professional-services activities in domestic and overseas
markets, as well as mobile broadband infrastructure upgrades to
offset gradual declines in the company's traditional products like
ADTRAN continues to grow on Ethernet access networks and other
bandwidth enhancement technologies for fiber-based networks. As a
result, the company is enjoying an industry leading profile with
approximately 15.0% market share in Ethernet over bonded copper
network solutions. ADTRAN is also moving into virtual wireless LAN
solutions with the incorporation of the Bluesocket technology in
Additionally, the company also registered significant growth in
its professional service activities that provide deployment of the
Total Access System components in telecommunication companies.
ADTRAN projects that professional service capabilities will remain
accretive as both domestic and international carriers seek
cost-effective methods to accelerate network deployments.
However, we believe that the acquisition of Nokia Siemens
Networks' fixed-line Broadband Access business would continue to
weigh on ADTRAN's earnings performance this year given its weaker
market shares. Further, muted performance by the company's
traditional product line - HDSL, lower spending by Tier 1 carriers
and ADTRAN's heavy reliance on key customers -
) - along with regulatory issues in the telecommunication industry
contribute to our cautious stance.
We are maintaining our long-term Neutral recommendation on the
stock. For the short term as well, the stock retains a Zacks #3
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