Adtran Earnings Confirm Key Telecom Trends

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 |  About: ADTRAN, Inc. (ADTN)
by: R. Scott Raynovich

Telecom and enterprise networking gear-marker Adtran (NASDAQ:ADTN) popped 7% Wednesday on solid earnings to confirm some key elements of the telecom market.

Adtran CEO Tom Stanton cited strong demand for Ethernet gear and broadband connectivity on the corporate conference call. "Strong demand for high speed connectivity coupled with increasing demand for Ethernet services led to our record revenue performance," said Stanton.

One of the themes we've been following is the buildout in more telecom connectivity -- whether it be ethernet connections or all those data connections to mobile-phone towers -- and Adtran's earnings appear to bear that out. The company is succeeding in these markets.

The Alabama-based networking and telecom equipment company beat analyst expectations with quarterly Earnings Per Share (EPS) of .44, whereas consensus expecations were for .35.

Adtran's sales increased 24% to a record level of $150 million for the quarter, compared to $122 million for the second quarter of 2009. Net income increased 47% to $28 million, compared to $19 million for the second quarter of 2009. This yielded EPS of $0.44 for the quarter, compared to $0.30 for the second quarter of 2009.

Growth was balanced across enterprise and telecom segments. This is a trend I expect to continue as enterprise corporations catch up after years of underspending on networking equipment and telecom companies beef up their access infrastructure in an effort to keep up with crushing demand for data access from consumers.


Disclosure: No position