ADTRAN Earnings: Margins SUFFER for Five Quarters Straight, Profit DROPS

ADTRAN Inc. (NASDAQ:ADTN) reported its results for the second quarter. Adtran designs, manufactures, markets, and services network access solutions for communications networks.

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ADTRAN Inc. Earnings Cheat Sheet

Results: Net income for ADTRAN Inc. fell to $21.1 million (33 cents per share) vs. $36.9 million (56 cents per share) a year earlier. This is a decline of 43% from the year-earlier quarter.

Revenue: Fell 0.1% to $184 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: ADTRAN Inc. reported adjusted net income of 38 cents per share. By that measure, the company beat the mean estimate of 35 cents per share. It fell short of the average revenue estimate of $190.2 million.

Quoting Management: ADTRAN Chief Executive Officer Tom Stanton stated, “Our results for the second quarter reflect a tightening spending environment. Total quarterly revenues grew 37% sequentially, with organic revenues (excluding the recently acquired NSN BBA business) up 20%, representing a flat year over year performance. Our Broadband Access category grew 38% (8% organic) over the same period last year.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 6.2 percentage points from the year-earlier quarter to 51.7%. Over that time, margins have contracted on average 3.4 percentage points per quarter on a year-over-year basis.

The company has now seen its net income fall for three quarters in a row. In the first quarter, net income fell 62.2% from the year earlier, while the figure fell 13.3% in the fourth quarter of the last fiscal year.

For three consecutive quarters, the company has topped analyst estimates. It beat the mark by 2 cents in the first quarter and by 2 cents in the fourth quarter of the last fiscal year.

Revenue has declined for two quarters in a row. In the first quarter, revenue declined 18.6% to $134.7 million from the year-earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the third quarter is 49 cents per share, down from 54 cents ninety days ago. For the fiscal year, the average estimate has moved down from $1.72 a share to $1.58 over the last ninety days.

Competitors to Watch: Calix, Inc., Cisco Systems, Inc., Tellabs, Inc., Alcatel-Lucent, Telefonaktiebolaget LM Ericsson, Sycamore Networks, Inc., Juniper Networks, Inc., Ciena Corporation, Extreme Networks, Inc, and Westell Technologies Inc.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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