ADTRAN Provides Confidence Boost for Ultra-Broadband Sector
It's early days yet, but ADTRAN's earnings report issued earlier this week suggests that 2017 could be a fruitful year for the suppliers of ultra-broadband networking technology and related services.
The vendor reported a 17% year-on-year rise in its fourth-quarter revenues, to $163 million, and full-year 2016 revenues of $637 million, up by 6.1% from the previous year. You can see the full details here: Adtran Reaps Rewards of Vectoring Ramp-Up at Deutsche Telekom.
So, good for ADTRAN; but what's more important is how things appear to be shaping up.
MKM Partners analyst Mike Genovese is an experienced analyst who knows the TMT sector and its players well. His research note on ADTRAN included the following: "We see wireline ultra-broadband access as one of the best secular stories in telecom equipment in 2017 and 2018 … [ADTRAN] is in the sweet spot of the vectoring cycle, and has the very promising G.fast and NG-PON2 cycles ahead."
That ties in with his recent view that while overall industry capital expenditure may shrink year-on-year in 2017, investments in fixed-line ultra-broadband and optical transport networks will increase. (See Capex Shifting to Fixed From Wireless in 2017: MKM.)
And let's not forget that while Nokia reported an overall sales decline for its third quarter last year, the one area of growth it had in its portfolio was in fixed networks. And broadband access vendor Calix also reported a sales increase for the third quarter of last year. (See Nokia Forecasts Sales Decline in 2017, Shares Fall and Calix Reports Revenue Rise in Q3.)
It'll be interesting to see what Nokia's fourth quarter fixed networks numbers are when the company reports its earnings in early February (a timeline based on previous years) and how Calix ended the year when it reports on February 14.
Let's hope all those data points fall in line with the theory that the ultra-broadband sector is on the rise.
— Ray Le Maistre, , Editor-in-Chief, Light Reading
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Vendor is well placed to benefit from 5G network investments in South Korea and Japan, where Rakuten Mobile is a customer.
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