Excluding Deutsche Telekom and Telmex, which took a purchasing hiatus in Q3, ADTRAN's business grew 20% over the prior quarter and generated an estimated $114 million, the company reported on Wednesday.
DT had cautioned ADTRAN earlier this year about spending cuts in the second half of 2019. Telmex encountered time delays generally associated with large infrastructure investments. Both operators remain ADTRAN customers, according to the vendor and public statements from DT and Telmex.
Earnings per share for the quarter, assuming dilution, will be about $0.96. Non-GAAP earnings per share for the quarter, with dilution, should be a loss of approximately $0.06. ADTRAN expects a one-time, non-cash, valuation allowance of about $37 million, recorded to income tax expenses, it said in these preliminary earnings. In Q2, ADTRAN reported more than $177 million in cash and securities, net of debt.
ADTRAN shares lost nearly 20% of their value in one day. The stock closed down $2.10 (-19.25%) to $8.81 in normal trading on Thursday.
"Our revenue this quarter has been significantly impacted by a pause in shipments to a Tier 1 customer in Latin America and the continued slowdown in the spending at an international Tier 1 customer. Although we expect our Latin American customer sales to rebound, our current visibility regarding timing is limited," said ADTRAN CEO Tom Stanton, in a statement. "For the international Tier 1 customer, we expect that sales should resume with the new capital cycle in 2020."
The company predicts 4Q19 revenue will be flat or down slightly from the third quarter. ADTRAN plans an earnings call on Oct. 31.
Like its competitors, ADTRAN has been successfully wooing smaller operators, coops, municipalities and -- in ADTRAN's case -- MSOs. CenturyLink was a 10% customer last quarter and cablecos represent a healthy opportunity for the vendor, wrote Michael Genovese, managing director at MKM Partners, in an advisory, where he downgraded the stock from Fair to Neutral.
"ADTRAN may potentially have three meaningful large cable MSO customers in 2020, which is a fairly new vertical for the company, Genovese wrote. "There are wireline access projects at the two largest US telcos that could be funded in 2020, including wireline products used for wireless backhaul at Verizon. DT spending is expected to come back in early 2020, and Telmex spending could come back at any time."
But, he cautioned, at least in the next year or two, fixed wireless access solutions could overtake demand for wireline fiber or copper broadband, and mmWave technologies may command the majority of operators' capex due to the 5G investment lovefest.
STC, Comcast and NTT Communications are among the operators interested in using Cisco's Silicon One, part of the vendor's newly unveiled unified single silicon architecture for routers that is designed to slash testing costs and time.
Many Tier 1 MSOs have yet to choose between EPON and GPON, and their natural ties to IEEE standard-based technologies plus EPON's accelerated future timeline, could make this an attractive standard for large cable ops, ADTRAN engineering exec Jess Beihoffer tells BBWN.
The federal watchdog agency recommends the FCC consider eliminating the old cost-accounting program since it's more prone to fraud than the alternative reimbursement method among small, rural providers that receive about $2.5 billion annually to deploy broadband.
The ongoing debate around GPON vs EPON can get as heated as discussions around politics and religion, but both technologies offer some advantages over the other depending on the needs your network is servicing.
In this webinar, we will focus on the facts around the GPON vs EPON debate and how that technological decision is almost always made based on factors outside the technology itself.
In this insightful Light Reading radio show, Kurt Raaflaub, Head of Strategic Solutions Marketing, will outline the key service provider challenges, deployment considerations, next-gen Gigabit technologies, and service models to win market share in the rapidly growing MDU market.