NFV, SDN starting to inspire white box fears. (Update 4/31 Adtran's stock climbed and Calix plummeted, leaving them both about the same % lost.) Adtran's stock fell 10% Wednesday, about $100M, to the lowest level in five years. Tom Stanton's company was hit hard by disappointing sales to two major customers. Quarterly sales were slightly down, partly explained by the euro falling against the dollar. Interim CFO Interim CFO Mike Foliano didn't warn the street of the sales decline. The analysts expect a wink and nod in advance with inside information.
Adtran remains a capable and profitable company but the market has been treating it as a growth stock. Telecom is not a growing business. Nearly no company except Huawei has seen sales increase.
AT&T canceled a project to upgrade some of the old BellSouth territory. That's not much of a surprise; AT&T's $4B capex cut this year is the largest of any telco over the last decade, anywhere in the world. Craig Moffett for several years has been pointing to how hard Randall has to work to cover the dividend. Over the last four years, dividends have actually exceeded earnings per share.
Deutsche Telekom is trying to weasel out of their repeated commitment to meet the EU 100 megabit speed with vectoring to 24 million homes in 2016.
Adtran winning a share of the huge DT contract was a huge coup for the team Adtran had acquired from Siemens. Adtran sales to DT continue limited as DT's actual build is much too slow to meet the target.
DT is trying to avoid upgrading 12 million of those lines which currently have "up to 50 megabit" VDSL. They have changed their rhetoric from "100 megabit vectored" service to "high speed" (undefined) and 50 megabits. Telecom Italia is playing the same game, trying not to install the vectored DSLAMs they committed to two years ago.
Several analysts were concerned that AT&T intends to replace expensive DSLAMs from Adtran and Alcatel with cheap "white boxes." John Stankey and John Donovan of AT&T have made clear NFV/SDN is their plan although I haven't seen evidence they are ready to do that in DSL. The Johns don't want to put expensive control logic throughout the network. AT&T decided five years ago that putting the logic in the center is cheaper and simplifies operations. They were among the first to speak of "separating the control plane and the data plane."
The analysts should look in the mirror and wonder why they set expectations so high.
Here's the release. Consider also checking the transcript, Seeking Alpha http://bit.ly/1JwCsre)
|ADTRAN, Inc. Reports Results for the First Quarter 2015 and Declares Quarterly Cash Dividend
HUNTSVILLE, Ala.--(BUSINESS WIRE)--Apr. 21, 2015-- ADTRAN, Inc. (NASDAQ:ADTN) reported results for the first quarter 2015. For the quarter, sales were $142,835,000 compared to $147,004,000 for the first quarter of 2014. Net income was $3,317,000 compared to $9,607,000 for the first quarter of 2014. Earnings per share, assuming dilution, were $0.06compared to $0.17 for the first quarter of 2014. Non-GAAP earnings per share were $0.10 compared to $0.21 for the first quarter of 2014. The reconciliation between GAAP earnings per share, diluted, and non-GAAP earnings per share, diluted, is in the table provided.
ADTRAN Chief Executive Officer Tom Stanton stated, “Revenue for the quarter came in lower than expected, driven by currency fluctuations in our European business, and the cancellation of a planned domestic Tier 1 program that was expected to commence late in the quarter. We did continue to see positive momentum in our European business, as well as the expected improvement in our Tier 2 carriers in the U.S. as CAF funding started to take hold.”
The Company also announced that its Board of Directors declared a cash dividend for the first quarter of 2015. The quarterly cash dividend is $0.09 per common share to be paid to holders of record at the close of business on May 7, 2015. The ex-dividend date is May 5, 2015 and the payment date is May 21, 2015.
The Company confirmed that its first quarter conference call will be held Wednesday, April 22, 2015 at 9:30 a.m. Central Time. This conference call will be web cast live through StreetEvents.com. To listen, simply visit the Investor Relations site at www.adtran.com or www.streetevents.com approximately 10 minutes prior to the start of the call and click on the conference call link provided.
An online replay of the conference call will be available for seven days at www.streetevents.com. In addition, an online replay of the conference call, as well as the text of the Company's earnings release, will be available on the Investor Relations site at www.adtran.com for at least 12 months following the call.
ADTRAN, Inc. is a leading global provider of networking and communications equipment. ADTRAN’s products enable voice, data, video and Internet communications across a variety of network infrastructures. ADTRAN solutions are currently in use by service providers, private enterprises, government organizations, and millions of individual users worldwide. For more information, please visit www.adtran.com.
This press release contains forward-looking statements which reflect management’s best judgment based on factors currently known. However, these statements involve risks and uncertainties, including the successful development and market acceptance of new products, the degree of competition in the market for such products, the product and channel mix, component costs, manufacturing efficiencies, and other risks detailed in our annual report on Form 10-K for the year ended December 31, 2014. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements included in this press release.
On August 4, 2011, we closed on the acquisition of Bluesocket, Inc. and on May 4, 2012, we closed on the acquisition of the Nokia Siemens Networks Broadband Access business (NSN BBA). Acquisition related expenses, amortizations and adjustments for the three months ended March 31, 2015 and 2014 for both transactions are as follows:
The acquisition related expenses, amortizations and adjustments above were recorded in the following Consolidated Statements of Income categories for the three months ended March 31, 2015 and 2014:
Source: ADTRAN, Inc.