ADC Reports Q2 Profit Rise; Revises Low End of Guidance Upward

Telecom equipment and software manufacturer ADC Telecommunications posted fiscal Q2 earnings well ahead of expectations Wednesday and upped the low end of its full-year profit guidance. The company's shares gained 3.24% to close at $17.85 in AH trading. ADC posted Q2 net income of $96.5 million ($0.73/share) against $25.1 million ($0.21) in the year-ago quarter. Net sales came in at $349.4 million versus $358.1 million a year ago. Analysts had forecast revenues of $333 million. EPS excluding items were $0.35, soundly beating analyst expectations of $0.23. The company is projecting full-year EPS from continuing operations of $1.06-1.11. Full-year EPS excluding items are forecast at $0.86-0.91, up from a $0.81-0.91 forecast offered by the company in March. Analysts had been calling for $0.87 EPS on $1.3 billion in full-year sales. The company expects H2 results to be "relatively flat to down modestly" from last year, but does "not expect that the quarterly pattern of results in fiscal 2007 will fluctuate as sharply as in fiscal 2006."

Sources: Press release, ADC Telecommunications F2Q07 Earnings Call Transcript, Forbes, TheStreet.com, RTT News
Commentary: ADC Telecom: JP Morgan Sees Stronger Outlook Than Expected • ADC Telecommunications Seeks China Entry via Acquisition
Stocks/ETFs to watch: ADC Telecommunications (ADCT). Competitors: ADTRAN Inc. (ADTN), Andrew Corp. (ANDW), Tyco International Ltd. (TYC). ETFs: iShares Goldman Sachs Network Index Fund (IGN), PowerShares Dynamic Networking (PXQ)

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