ADTRAN Inc. (ADTN), a global provider of networking and communications equipment, reported second quarter 2011 earnings of 56 cents per share that surpassed the Zacks Consensus Estimate of 51 cents.
The quarter’s results also improved from 44 cents in the year-ago quarter on strong sales.
Net profit shot up 33.1% to $36.9 million from $27.8 million in the year-ago quarter.
Revenue climbed 22.5% year over year to $184.2 million and was well ahead of the Zacks Consensus Estimate at $179 million. Stellar performances by the company’s three main growth products –– Broadband Access, Internetworking and Optical Access ––led to its fifth consecutive quarterly revenue record.
The combined year-over-year growth for these products was a substantial 48%. Individually, Broadband Access shot up 71% year over year, driven by the continued adoption of total access 5000 and fiber-to-the-node platforms. Internetworking products grew 18% boosted by channel expansion and new product offerings. Optical Access increased 36% on higher mobile data demand.
Liquidity
ADTRAN exited the second quarter 2011 with cash and cash equivalents of $23.8 million, compared with $31.7 million at the end of fiscal 2010.
The company maintains a zero debt balance but has long-term obligations to pay bonds that fell 2.1% to $46.5 million from the 2010 level of $47.5 million.
Dividend
The company’s board of directors declared a cash dividend of 9 cents per share for the second quarter. The dividend will be paid on August 11 to shareholders of record on July 28.
Our Analysis
We believe ADTRAN remains well positioned to benefit from the current market dynamics. Additionally, the company’s three key products lines have registered continued revenue highs. We believe the company is benefiting from several new product cycles in broadband access, wireless backhaul products, fiber to the node, Ethernet over copper, optical and enterprise VoIP.
However, competitive threats, regulations and customer concentration may limit the company’s growth. ADTRAN generates the majority of its revenue from big customers such as AT&T Inc. (T), Verizon Communications (VZ) and Qwest Communications. The Qwest–CenturyLink Inc. (CTL) merger can have adverse effects on ADTRAN’s revenue growth thereby restricting its profitability.
Consequently, we are maintaining our long-term Neutral recommendation on the stock supported by a Zacks #3 (Hold) Rank.
ADTRAN INC (ADTN): Free Stock Analysis Report
CENTURYTEL INC (CTL): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
Be the first to comment