April 15, 2009 / 6:53 PM / in 9 years

UPDATE 1-Adtran sees Q2 revenue rising sequentially; shares jump

* Sees Q2 gross margin in the high 50 pct levels

* Shares rise 10 pct

By Shrutika Verma

BANGALORE, April 15 (Reuters) - Networking and communications equipment provider Adtran Inc (ADTN.O) said it expects second-quarter revenue to rise in the mid-to-high single-digit range sequentially, despite a slowdown in carrier spending.

Shares of the company, which on Tuesday reported a strong first quarter, rose 10 percent to $20.12 in afternoon trade Wednesday on Nasdaq.

The company’s Tier 1 customer base, which includes AT&T Inc (T.N) and Verizon Communications Inc (VZ.N), is driving growth for its products, Kaufman Brothers analyst Colby Synesael said by phone.

In the first quarter, AT&T and Verizon contributed 29 percent and 11 percent, respectively, to the company’s total revenue of $110.4 million.

Late Tuesday, Adtran, which competes with Cisco Systems (CSCO.O) and Juniper Networks JNPR.O, reported first-quarter earnings of 24 cents a share, beating Wall Street estimate of 22 cents, according to Reuters Estimates. [ID:nWNAB3365]

The Huntsville, Alabama-based company expects second-quarter margins to be in the high 50 percent levels, a company executive said in a conference call with analysts.

It had reported gross margins of about 61 percent in the first quarter.

“The company does have some new products coming on line that they are going to start to sell which is going to compress the gross margins a little bit,” analyst Synesael said.

Needham & Co analyst Greg Mesniaeff said the outlook is fairly promising, and carrier capital spending declines may also be bottoming out. (Editing by Deepak Kannan)

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