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Alabama-based networking solution provider, ADTRAN Inc. (ADTN - Analyst Report) announced the expansion of its NetVanta product line with the introduction of NetVanta 160 and 161 wireless access points. These products can support Dual 802.11n radios up to 600 Mbps and be the first NetVanta products to be equipped with Bluesocket technology. These product lines are expected to support wireline and wireless network solutions by simplifying network infrastructure for small to medium enterprises.

We believe that the rise in global broadband deployments, intensive upgrade of mobile infrastructure, and channel expansion in the Enterprise segment are the key factors driving ADTRAN’s focus on building an innovative and diverse product portfolio. The company has already benefited from its three main growth products, namely Broadband Access, Optical Access and Internetworking that represent approximately 78% of the company’s total revenue.

Further, we expect broadband stimulus, Total Access 5000, fiber-to-the-node platforms, incremental international sales, growing professional-services activities in domestic and overseas markets, as well as mobile broadband infrastructure upgrades to offset gradual declines in the Company’s traditional products like HDSL. ADTRAN continues to grow on Ethernet access networks and other bandwidth enhancement technologies for fiber-based networks. As a result, the company is enjoying an industry leading profile with approximately 15.0% market share in Ethernet over bonded copper network solutions.ADTRAN is also moving into virtual wireless LAN solutions with the incorporation of Bluesocket technology.

Besides these growth products, the company has also registered significant growth in its professional service activities that provide deployment of the Total Access System components in telecommunication companies. The company projects that professional services capabilities will remain accretive as both domestic and international carriers seek cost-effective methods to accelerate network deployments.

However, we believe that the acquisition of Nokia Siemens Networks’ fixed-line Broadband Access business would continue to weigh on ADTRAN’s earnings performance this year given its weaker market shares. Further, declining performance of the company’s traditional product line, HDSL, lower spending by Tier 1 carriers and its heavy reliance on its key customers like AT&T Inc. (T - Analyst Report) and Verizon Communications Inc. (VZ - Analyst Report) along with regulatory issues in the telecommunication industry contribute to our cautious stance on the company.

We are maintaining our long-term Neutral recommendation on the stock supported by a Zacks #3 Rank (Hold).

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