Bloomberg News

ADT Tumbles Most in S&P 500 as Profit, Sales Trail Estimates (2)

January 30, 2014

ADT Corp. (ADT:US), the provider of security services for residences and small businesses, tumbled the most in the Standard & Poor’s 500 Index after profit and sales trailed analysts’ estimates.

The shares plunged 17 percent to $31.40 at the close in New York, the biggest decline since the Boca Raton, Florida-based company’s 2012 spinoff from Tyco International Inc. (TYC:US)

A 9.4 percent decline in new customers for the quarter ended Dec. 27 surprised investors who had long seen ADT as a relatively stable business, said Ian Zaffino, an analyst with Oppenheimer & Co. He said the company faces pressure from new home-security competitors such as AT&T Inc. and Comcast Corp. (CMCSA:US)

“They’re taking away the lead generation from ADT,” Zaffino said in a telephone interview. Zaffino, who is based in New York, cut his rating on the shares earlier today to market perform from outperform.

Earnings excluding some costs were 43 cents a share and revenue was $839 million, missing analysts’ projections of 49 cents and $850.7 million, based on data compiled by Bloomberg. Net income (ADT:US) for ADT’s fiscal first quarter fell 27 percent to $77 million.

Zaffino said part of the competitive pressure on ADT comes from the heavy television promotion of home-security services by Comcast, the largest U.S. cable company, and AT&T, the biggest U.S. phone company.

“Customer growth did not meet our expectations,” Chief Executive Officer Naren Gursahaney said in a statement. ADT is working to “regain subscriber traction in the future.”

Net income in the quarter was the lowest for any three-month period since ADT began reporting results separately following the spinoff from Tyco, according to data compiled by Bloomberg.

To contact the reporter on this story: J. Kyle O’Donnell in New York at jodonnell49@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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Companies Mentioned

  • ADT
    (ADT Corp/The)
    • $35.38 USD
    • 0.11
    • 0.31%
  • TYC
    (Tyco International Plc)
    • $44.7 USD
    • 0.33
    • 0.74%
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