ADTRAN Inc. Earnings: Increased Costs Strains Margins as Profit Drops

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

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ADTRAN Earnings Cheat Sheet for the Fourth Quarter.

Results: Net income for ADTRAN Inc. fell to $31.2 million (48 cents per share) vs. $36 million (56 cents per share) a year earlier. This is a decline of 13.3% from the year earlier quarter.

Revenue: Rose 6% to $175.3 million from the year earlier quarter.

Actual vs. Wall St. Expectations: ADTN beat the mean analyst estimate of 46 cents per share. Analysts were expecting revenue of $174.7 million.

Quoting Management: ADTRAN Chief Executive Officer Tom Stanton stated, “Our Company had a solid fourth quarter which contributed to a record year in 2011. Our performance continued to be driven by our core product areas which include Broadband Access, Internetworking and Optical Access. Combined these areas grew 32% for the quarter compared to the same period in 2010. Growth was led by Broadband Access which grew 49% and Internetworking which grew 37% for the quarter. We believe that our strategic areas of focus are well aligned with global market trends and will provide our company long term growth.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the third quarter, net income rose 12.9% from the year earlier, while the figure increased 33.1% in the second quarter, 88.3% in the first quarter and 93.2% in the fourth quarter of the last fiscal year.

Gross margin shrank two percentage points to 56.6%. The contraction appeared to be driven by increased costs, which rose 11.2% from the year earlier quarter while revenue rose 6%.

Revenue has risen the past four quarters. Revenue increased 17.9% to $192.2 million in the third quarter. The figure rose 22.5% in the second quarter from the year earlier and climbed 30.3% in the first quarter from the year-ago quarter.

The company beat estimates last quarter after being in line with expectations in the third quarter with net income of 56 cents per share.

Looking Forward: Over the past ninety days, the average estimate for the first quarter of the next fiscal year has fallen from 50 cents per share to 48 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. For the fiscal year, the average estimate has been unchanged at $2.11 a share.

Competitors to Watch: Calix, Inc. (NYSE:CALX), Cisco Systems, Inc. (NASDAQ:CSCO), Tellabs, Inc. (NASDAQ:TLAB), Alcatel-Lucent (NYSE:ALU), Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC), Sycamore Networks, Inc. (NASDAQ:SCMR), Juniper Networks, Inc. (NYSE:JNPR), Ciena Corporation (NASDAQ:CIEN), Extreme Networks, Inc (NASDAQ:EXTR), and Westell Technologies Inc. (NASDAQ:WSTL).

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


To contact the reporter on this story: Derek Hoffman at

To contact the editor responsible for this story: Damien Hoffman at