ADTRAN Partners Accuris - Analyst Blog

Communication networking solution provider, ADTRAN Inc. (ADTN) has collaborated with Ireland-based Accuris Networks to offer networking solutions for cloud-based mobile offload and roaming. Accuris Networks provides Wi-Fi Offload and Roaming Inter-Working solutions and will facilitate ADTRAN's Total Solution Alliance Program.

Given the new partnership, ADTRAN will be able to tap opportunities in the cloud-based market and enhance networking solutions for mobile data transmit.

With Mobile data offload support from ADTRAN, operators will now be able to manage their heavy data traffic on 3G and LTE networks and support a data session on Wi-Fi networks, reducing the burden on cellular networks. We believe the new partnership will increase revenues from broadband access and IP networking equipment, and make it more competitive.

Apart from this partnership, the company also gained from its acquisition of Nokia Siemens Network (NSN) fixed-line Broadband Access business in May 2012. The company has already begun working on manufacturing NSN's selected products using its supply chain and believes the new business will add to ADTRAN's global presence given its established business in the international market.

The company is also moving into virtual wireless LAN solutions with the buyout of Bluesocket, a privately held U.S. company that specializes in wireless network solutions with virtual control system.

Besides the company's strategic collaborations, we believe organic growth for the company will be largely based on a recovery in the spending pattern of tiered carriers and the enterprise segment, increased penetration of TA 5000, professional services at domestic and international levels, mobile broadband infrastructure upgrade and funds generated through Broadband Stimulus projects.

The company has also registered significant growth in its professional services that provide deployment of the Total Access System components in telecommunication companies. The company projects that professional services capabilities will remain accretive as both domestic and international carriers will seek cost-effective methods to accelerate network deployments.

However, ADTRAN's near-term growth will be under pressure due to weak performances by the company's traditional products – mainly HDSL. Regulatory factors, heavy reliance on its key customers such as AT&T Inc. (T) and Verizon Communications (VZ) as well as high spending on expansion could also restrict the company's revenue stream and profitability.

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Acme Packet, Inc. (APKT), which has a Zacks Rank #1 (Strong Buy) is another stock in this sector worth considering.

ADTRAN has a Zacks Rank #3 (Hold) rating.