Networking solution provider
, ADTRAN, Inc.
(
ADTN
) has announced its revised revenue and earnings estimates for the
third quarter 2012. Revenues are estimated at approximately $162
million, down from $192.2 million generated in the third quarter of
2011.
In addition, GAAP earnings per share for the quarter are
expected in the range of 14 cents to 15 cents, while adjusted or
non-GAAP earnings per share are expected to range between 18 cents
and 19 cents. Whereas during the year-ago quarter, the company's
earnings per share were 56 cents.
Previously, the company expected revenue growth in the third
quarter to remain flat year over year or marginally up on a
sequential basis. However, given the current market condition with
a poor demand trend, the company remains skeptical on its near-term
growth trajectory.
During the release of second quarter results, ADTRAN hinted that
the market volatilities along side acquisition expenses may hinder
its margin performance and thereby impact the earnings results.
However, no specific figures were provided on earnings estimates
back then.
Challenging economic environment continues to weigh over carrier
spending resulting in lower business for ADTRAN. Lower carrier
infrastructure spending by Tier-1 carriers like
Verizon Communications Inc.
(
VZ
) and
AT&T, Inc.
(
T
) resulted in a restrained revenue growth and we expect this trend
to continue over the near term. Additionally, the company's
traditional products, mainly HDSL, will continue to decline with
increased market traction in Ethernet and fiber-based
platforms.
However, we believe that the company's organic growth will be
largely based on the recovery in spending pattern of tiered
carriers. The company expects positive results from the bidding
activities within Tier 1 and Tier 2 carriers in the domestic and
international markets. Further, increased penetration of TA 5000,
professional services at domestic and international levels, mobile
broadband infrastructure upgrade and funds generated through
Broadband Stimulus projects are also expected to drive growth.
Additionally, the acquisition of Nokia Siemens Network (NSN)
fixed-line Broadband Access business in May this year remains
encouraging for the company's long-term growth prospects. The
company is working on manufacturing NSN's selected products using
its supply chainand believes that the new business will add to its
global presence given NSN's established business in the
international market.
Currently, we have a long-term Neutral recommendation on ADTRAN
supported by a Zacks #3 (Hold) Rank.
ADTRAN INC (ADTN): Free Stock Analysis Report
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