One of the themes we’ve been following here 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 Alabama-based networking and telecom equipment company handily beat analyst estimates, announcing quarterly Earnings Per Share (EPS) of .44, whereas consensus expecations were for .35. The stock was trading up 7% — about $2 — to $30.90 in midday trading.
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 Earnings Per Share (EPS) of $0.44 for the quarter, compared to $0.30 for the second quarter of 2009.
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.
The CEO pointed to 43% growth in broadband access gear over the same period in the prior year. Growth was balanced across enterprise and telecom segments.
Adtran remains the beneficiary of several key macro trends in the telecome market. The first is the move from traditional voice-circuit gear to data gear, including heavy demand for so-called “mobile backhual” gear that connects mobile towers to the core telecom networks. In addition, Adtran is benefitting from the expansion of the Ethernet market in enterprise and telecom markets. Adtran specializes and switches and routers connected in many cases to Etheren networks.
Lastly, government stimulus money is making its way into the broadband market, where Adtran is also a beneficiary.