ADTRAN's stock takes a hit from lower than expected Q3 earnings, Q4 outlook

ADTRAN's (Nasdaq: ADTN) stock is down slightly after reporting lower than expected Q3 2011 results and a lower than expected Q4 outlook, breaking a multi-quarter streak.

For the quarter, the company reported that sales rose 18 percent to $192.2 million from the same quarter in 2010, beating out Wall Street's $189.4 million estimate, while its profit of 56 cents a share met expectations.

Similar to previous quarters, ADTRAN's broadband access, internetworking and optical access segments all grew. Leading the way was broadband access, which grew 93 percent over Q3 2010.

"Broadband access performed well with large carriers domestically, as we saw substantial growth in both the Total Access 5000 and fiber-to-the-node product areas," said Tom Stanton, CEO and president in the earnings call. "Broadband access also performed well outside of the U.S., with solid growth in the Total Access 5000 area and, as expected, substantial growth in fiber-to-the-node over the same period last year. Finally, although off to a slow start, we saw a modest increase in shipments in Q3 for broadband stimulus, and we expect to see another modest increase in Q4 with meaningful pickup beginning in 2012."

At the same time, optical access grew 20 percent over Q3 2010, a factor Stanton relates to sales to wholesale service providers and wireless operators upgrading their "mobile backhaul infrastructure upgrades."

However, Q3 gross margin was 57 percent, slightly lower than Wall Street analysts' 58.2 percent forecast, while its 26.6 percent operating margin fell short of the 28.6 percent estimate.

What's causing the most concern for investors is the company's Q4 outlook. The vendor reported that "revenues will decline in a range of 9 percent to 10 percent on a sequential basis."

For more:
- see the release
- Forbes has this article

Related articles:
ADTRAN's Bluesocket acquisition signals growing interest in WiFi cloud services
UPDATE: ADTRAN's stock up 4% on higher than expected Q2 2011 earnings, but Q3 outlook disappoints
ADTRAN sales up again in Q3
Frontier employs ADTRAN for next phase of its broadband expansion effort

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