ADTRAN's Q4 sales slide to $139.7 million

CEO attributes decline to 'difficult' spending environment
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ADTRAN (Nasdaq: ADTN) on Tuesday reported that Q4 2012 sales dropped to $139.7 million year-over-year from $175.2 million as service providers and businesses kept a tight rein on spending.

Net income declined to $3.9 million for the quarter from $31.1 million in Q4 2011, while earnings per share, assuming dilution, were $0.06 for the quarter, compared to $0.48 for the fourth quarter of 2011.

These results were in line with the forecast ADTRAN issued in October after releasing its Q3 2012 results. At that time, the vendor said it expected revenues to decline sequentially in the teens percentage point range. Analysts polled by I/B/E/S expected ADTRAN to report Q4 revenue of $149 million. 

Tom Stanton, CEO of ADTRAN, said during the Q4 earnings call that the company attributes the decline to a "spending environment which remained difficult during the quarter."

"Our domestic Tier 1 customers showed some signs of stability in the quarter with all three carriers overcoming normal seasonal trends ending either flat or up for the third quarter--compared to the third quarter," he said. "The Tier 2 and Tier 3 U.S. carrier market came in as expected, showing a normal sequential decline from the third quarter."

From a product revenue standpoint, ADTRAN's three main product lines--carrier systems, business networking and loop access--all saw varying degrees of gains and declines.

The carrier systems business was the hardest hit as revenues declined sequentially from $119.9 million to $101.2 million.

Inside the carrier systems business, broadband access revenues were $70 million, down from $94.4 million in Q3, while optical access rose to $12.3 million from $11.1 million in the third quarter. While sales to Tier 2 service providers declined as expected, they were up over 100 percent on a year-over-year basis.

Likewise, ADTRAN's Internetworking unit, which includes NetVanta & Multi-service Access Gateways, declined sequentially from $35.4 million to $31.6 million.

"By far, the largest impact occurred in our products, both enterprise and carrier, which are sold to carriers," Stanton said. "Of course, our carrier division felt the brunt of this pullback, which manifested itself most strongly and decreased capital expenditures at two substantial Broadband Access customers."

ADTRAN's stock was listed on Wednesday at $21.96 at the close of trading on the Nasdaq stock exchange.

For more:
- see the earnings release
- and the earnings call transcript

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