) to neutral from outperform.
Analyst Kenneth Muth said the company's recent announcement mainly reflects a slowdown at Verizon (VZ
) for FTTx equipment. He thinks Verizon is going through an inventory correction for outside cabinet equipment and has shifted spending to lower dollar per unit products, such as splitters and couplers. He thinks the inventory correction should not affect other equipment vendors. He cut his 29 cents fourth quarter earnings per share estimate on $320 million in revenue to 19 cents on $290 million in revenue, and his $1.35 fiscal year 2006 (ending October) earnings per share estimate on $1.39 billion revenue to $1.04 earnings per share on $1.27 billion revenue. While the FTTx slowdown may be temporary, he sees overhang until ADC can demonstrate revenue reacceleration.