ADVA Optical Networking reported first-quarter 2014 revenues of $108 million, meeting the upper end of its guidance of $102 million to $109 million, up 1.4 percent year-over-year due to stronger enterprise business in the Americas and the EMEA regions.
The vendor's International Financial Reporting Standards (IFRS) pro forma operating income was $0.6 million, or 0.5 percent of revenues, and was in line with guidance of between -2 percent and +2 percent of revenues.
This compares to $1.1 million or 1.0 percent of revenues in the first quarter of 2013 and $3.18 million or 3.0 percent of revenues in the fourth quarter of 2013. The company said these developments are largely due to lower gross margins adversely impacted by product and customer mix, higher amortization charges for capitalized development projects and reduced income from capitalization of development expenses.
Looking toward the second quarter, ADVA has forecast revenues of $116 million and $123 million and anticipates pro forma operating income of between -2 percent and +2 percent of revenues.
"Although, we are seeing signs of the telecommunications industry slowly returning to growth in Europe, the broader sentiment remains cautious as the shift to software-centric networks and architectural changes is deferring service provider investment decisions in the short-term," said Brian Protiva, CEO of ADVA Optical Networking, in the earnings release. "In order to support the exponential increase of high-capacity data and video applications, the drive toward Long Term Evolution-Advanced (LTE-A) networks and small cells is creating pressure on both mobile network operators and backhaul service providers, and thus both are continuing to evolve their networks to packet-based solutions. Precise timing and synchronization is critical for this development."
To bolster its wireless backhaul capabilities, the vendor announced in March that it was acquiring Oscilloquartz SA, a Neuchatel, Switzerland-based network synchronization vendor, from Swatch Group. This acquisition gave it access to a large established customer base of traditional telcos that's served by more than 80 distributors.
Shares of ADVA Optical were listed at $3.25, down 14 cents or 3.98 percent, in Thursday afternoon trading on the XETRA stock exchange stock exchange.
For more:
- see the earnings release
Special report: Wireline telecom earnings in the first quarter of 2014
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