Alabama-based networking solution provider,
) announced the expansion of its NetVanta product line with the
introduction of NetVanta 160 and 161 wireless access points. These
products can support Dual 802.11n radios up to 600 Mbps and be the
first NetVanta products to be equipped with Bluesocket technology.
These product lines are expected to support wireline and wireless
network solutions by simplifying network infrastructure for small
to medium enterprises.
We believe that the rise in global broadband deployments,
intensive upgrade of mobile infrastructure, and channel expansion
in the Enterprise segment are the key factors driving ADTRAN's
focus on building an 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 the company's 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
HDSL. 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 Bluesocket
Besides these growth products, the company has also registered
significant growth in its professional service activities that
provide deployment of the Total Access System components in
telecommunication companies. The company projects that professional
services capabilities will remain accretive as both domestic and
international carriers seek cost-effective methods to accelerate
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, declining performance of the company's
traditional product line, HDSL, lower spending by Tier 1 carriers
and its heavy reliance on its key customers like
Verizon Communications Inc.
) along with regulatory issues in the telecommunication industry
contribute to our cautious stance on the company.
We are maintaining our long-term Neutral recommendation on the
stock supported by a Zacks #3 Rank (Hold).
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