Adtran, Acme Packet, Calix shares plunge over forecasts

Network equipment makers have been facing slowing demand for their products as telecom carrier customers cut spending amid a sluggish U.S. economy and weakness in Europe. This hold true for both Acme Packet and Adtran, who reported shares at their lowest in two years, while Calix reported that shares have dived to their lowest ever.



Network equipment makers have been facing slowing demand for their products as telecom carrier customers cut spending amid a sluggish U.S. economy and weakness in Europe. This hold true for both Acme Packet and Adtran, who reported shares at their lowest in two years, while Calix reported that shares have dived to their lowest ever.


Adtran Inc (Huntsville, Ala., USA) said it expects the slowing economy to hurt third-quarter revenue, sending its shares down to that two-year low. The company, which reported lower-than-expected second-quarter revenue last Tuesday, said it expects third-quarter revenue to be flat to slightly up on a sequential basis.


“During the quarter it has become apparent that customer sentiment in the current environment from an economic and regulatory perspective has deteriorated,” a company executive said on a post-earnings call on Wednesday.


Analysts are expecting Adtran to report third-quarter revenue of $221.6 million, according to Thomson Reuters. The company also expects third-quarter gross margins to be flat on a sequential basis.


Adtran reported second-quarter adjusted earnings of 38 cents per share, on revenue of $184 million. Analysts expected adjusted earnings of 35 cents per share on revenue of $190.3 million for the second quarter. Shares of Adtran, which has lost a third of its value in the last year, were down 16% at $22.95 in midday trade on the Nasdaq.


Shares of Calix Inc (Petamula, Calif., USA) plunged to their lowest ever, after the telecom equipment maker said it expects second-quarter results to fall well below its earlier forecast, due to a cut in customer spending.  At least four brokerages cut their price targets on the company’s stock.


“The revised estimates reflect softness … due to a slowdown in capital expenditures by service providers increasingly concerned about macroeconomic conditions and uncertainties associated with the implementation of regulatory reforms,” Calix said in a statement on Wednesday.


Raymond James analyst Simon Leopold, who had expected Calix to be better insulated from the slowdown than Adtran, cut his price target on Calix’s shares to $8.50 from $10.


“(We) expect its shares to face material pressure following its negative pre-announcement,” Leopold wrote in a note. Calix shares, which have lost almost three-quarters of their value since their year-high of $22.47 last July, fell 27% to their life low of $4.75 in early trade on Thursday on the New York Stock Exchange.


Shares of Acme Packet Inc (Bedford, Mass., USA) slid as much as 16% to their lowest in two years amid a broad selloff in the technology sector after the network gear maker forecast quarterly results that fell far short of expectations.


Acme said it continued to experience weakness in its North American business. The company, whose shares have fallen more than 80% since April 2011, had said in May that it expected orders to pick up in the second half of the year.


“We view this as yet another significant setback in the company’s efforts to regain investor confidence following several missteps,” analysts at Lazard Capital Markets (New York) said in a client note. “(We) believe the shares will likely be under pressure until signs of both improved execution and spending emerge.”


Slowing growth at Acme’s session border controller business, which makes products that enable calls over the Internet, and intensifying competition are cause for concern, Mizuho Securities analyst Joanna Makris said in a client note. That business accounts for about 80% of Acme’s revenue.


Acme said it expected a second-quarter profit of 12 cents to 13 cents per share, excluding items and forecast revenue of $66 million to $68 million, down from $79.7 million a year earlier. It expects its gross margin to fall to about 79 or 80%, down from 84% a year earlier.


The slow spending is hurting vendors such as Calix, Adtran Inc and Acme Packet just as they were recovering from the 2008 recession and intense price wars.


 (Reporting by Supantha Mukherjee and Sayantani Ghosh in Bangalore; Editing by Joyjeet Das and Ted Kerr; Reporting by Siddharth Cavale and Shubham Singhal in Bangalore; Editing by Joyjeet Das and Supriya Kurane; Reporting By Aurindom Mukherjee in Bangalore; Editing by Maju Samuel, Supriya Kurane)