Adtran falls on disappointing 3rd-qtr outlook

Associated Press

NEW YORK (AP) — Shares of Adtran, which makes equipment that links homes and businesses to the Internet, dropped to their lowest point in more than three years on Friday, after the company's third-quarter earnings and revenue forecasts came in below analysts' expectations.

THE SPARK: Adtran Inc. said late Thursday that anticipates third-quarter adjusted earnings of 18 cents to 19 cents per share, on revenue of about $162 million. The Huntsville, Ala. company previously predicted revenue would be flat to slightly up from the second quarter's $184 million.

Analysts, on average, were expecting earnings of 30 cents per share, on revenue of $187.8 million, according to FactSet.

Adtran said its results were hurt by weak economic conditions and regulatory concerns. The biggest impact was from ongoing delays in project rollouts in the U.S. carrier market, as well as a decline in sales for some of its older products.

THE ANALYSIS: Jefferies' George Notter said in a client note that he was not surprised by the issues Adtran said it is facing, as carriers seem to be scrutinizing their capital spending more than ever before.

The analyst maintained an "Underperform" rating.

Citi Investment Reseach's Jim Suva lowered Adtran's price target to $20 from $25 and reaffirmed a "Neutral" rating.

Suva said Adtran is seeing some increased bidding, but he feels that there needs to be more good news — like an uptick in carrier spending — before he gets more enthusiastic about the stock.

SHARE ACTION: Adtran Inc.'s stock declined $1.70, or 8.9 percent, to $17.46 in morning trading. The stock fell to $17.31 earlier in the session, the lowest point since March 2009. The company's shares ended Thursday trading down 38 percent since the start of the year.

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