Adtran Q2 net down 43% on higher costs

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CEO Tom Stanton blames ‘tightening spending environment’ for profit dip, flat sales.

Adtran Inc.’s second-quarter earnings fell 43% as the company’s revenue declined and costs rose. Adtran Chief Executive Tom Stanton said the results “reflect a tightening spending environment.”
The latest period is Adtran’s third consecutive quarter of profit decline. The networking and communications equipment company reported stronger earnings in 2010 and most of 2011 due to increasing demand for higher-speed services and mobile infrastructure upgrades. However, weaker margins pressured the company’s fourth-quarter earnings, while delayed orders hurt its first-quarter results.
Adtran reported a profit of $21.1 million, or 33 cents a share, down from $36.9 million, or 56 cents a share, a year earlier. Adjusting for acquisition-related expenses, amortizations and stock compensation expenses, per-share earnings were 38 cents, compared with 59 cents the previous year.
Sales edged down 0.12% to $184 million from $184.2 million. Analysts polled by Thomson Reuters expected a per-share profit of 35 cents and revenue of $190 million.
Gross margin narrowed to 51.7% from 58%. Research and development costs were 32% higher at $32.4 million. Broadband access revenue, the biggest contributor to the top line, was up 38%. Adtran’s smaller internetworking segment’s revenue rose 6%. Shares closed at $27.19 Tuesday and were inactive premarket. The stock is down 33% in the last 12 months.