Adtran shares down after rival's deal, downgrade
NEW YORK (AP) — Shares of Adtran Inc., which makes equipment that links homes and businesses to the Internet fell Thursday after a competitor snapped up Ericsson's broadband access business.
THE SPARK: Adtran rival Calix Inc. said late Wednesday that it would buy Ericsson's fiber access division. Ericsson will also resell Calix equipment in 180 countries as "preferred" supplier.
THE ANALYSIS: Credit Suisse analyst Paul Silverstein downgraded shares of Adtran from "Neutral" to "Underperform" on Thursday, saying the Ericsson deal makes Calix a bigger threat, particularly since the resale agreement seems to "intercept" Adtran's own resale agreement with Ericsson.
In addition he sees capital expenditures for broadband access equipment at U.S. phone companies declining or staying flat.
Huntsville, Ala.-based Adtran bought the broadband business of another European equipment maker, Nokia Siemens Networks, in May. Silverstein said the value of the acquisition is likely eroding because of declining phone-company investment in Europe.
SHARE ACTION: Adtran shares fell $1.66, or 7.3 percent, to $21.22 in afternoon trading. The low for the day was $20.63, near the three-year low of $20.30 hit in July.