ADC Telecommunications Inc.ADCT

Morningstar Rating

Stock Research and Analysis

by Joseph Beaulieu

Although ADC Telecommunications has taken many steps to navigate the changing telecom market and the current recession, our view is that the company's weak position relative to its customers and the commoditylike nature of the bulk of its products will Read more

Bulls Say

ADC has developed customer relationships with nearly all of the top 100 global communication carriers. Its broad portfolio of connectivity equipment is used in a large portion of carrier network projects, regardless of the technology implemented.

Carrier investment to install fiber closer to customers should remain one of the most favorable areas of telecom equipment spending during the next few years, and ADC has a wide exposure to this market. Read more

Bears Say

ADC's heightened exposure to project-based spending has led to increasingly volatile results. Carrier consolidation is also contributing to volatility, given increased sensitivity to individual customer spending patterns.

As carriers increase capital spending on fiber rollouts, they will reduce spending to upgrade copper network infrastructure. For ADC, this effectively means it will be replacing a higher-margin business with a lower-margin business

We think that growth opportunities will be sparse. The company can certainly develop new product lines, make acquisitions, and expand internationally. But none of these courses guarantee growth, and each carries substantial risks.

ADC's fast-growing wireless business does not generate positive operating margins. Read more

Strategy

ADC is attempting to consolidate fragmented equipment markets in China, India, and other emerging countries. The company believes it can improve profitability as it gains scale, and by shifting production Read more

Management

Robert Switz has served as ADC's CEO since 2003. His long tenure at the company includes a 10-year stint as CFO and an executive role as the head of ADC's former broadband access and transport group. Switz's promotion to CEO coincided with a gradual Read more

Profile

ADC Telecommunications manufactures network infrastructure equipment used by telecom carriers, cable providers, broadcasters, and large enterprises. Its products consist Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Daily Dividend Reports: PEP, ADP, L, AVP, PKY
Watch more