ADTRAN to Enhance Shareholders' Wealth - Analyst Blog

Yesterday, ADTRAN Inc. ADTN announced that its board of directors has decided to raise its current share buy-back program by an additional five million shares.

The present share buy-back program, approved on May 1, 2013, has 1,200,233 shares remaining to be repurchased. Upon completion of the existing plan, the new plan will be implemented through open market or private purchases from time to time, as decided by management.

ADTRAN continues to perform well owing to strong contributions from the U.S., Europe, the Middle East, Africa and Latin America. The company has stabilized its businesses with Tier 1 carriers and has also won contracts from Tier 2 and Tier 3 carriers. We expect ADTRAN to benefit from market share gain, strong growth of core products, solid international sales and growing service revenues.

Further, the acquisition of the fixed-line Broadband Access business from Nokia Network and Solutions (NSN) enhanced the company's growth prospects. NSN is a division of  Nokia Corp. NOK.

ADTRAN has started working on selected NSN products using its supply chain and believes that the new business will enhance ADTRAN's global presence given its established business in the international market. The company expanded its dealer base by including 70 new partners.

Nevertheless, ADTRAN is facing double-edged problems: (1) the communications equipment industry is currently going through a volatile phase due to uneven capital spending of telecom carriers and (2) increasing competitive pressure within the industry.

Other Stocks to Consider

ADTRAN currently carries a Zacks Rank #3 (Hold). Other better-ranked stocks in the communications infrastructure industry include Arris Group Inc. ARRS and CommScope Holding Company Inc. COMM. Both these stocks carry a Zacks Rank #1 (Strong Buy).