ADC slashes outlook
Capital spending reductions in the telecom sector are dragging down ADC. The broadband network equipment and systems provider is curbing its third-quarter sales forecast.
ADC expects to post a third-quarter loss of 5 cents to 7 cents a share and record revenue of $235 million to $245 million. In May, the company predicted revenue could be as high as $295 million. Analysts had been expecting a loss of 5 cents a share on sales of $282.9 million, on average, according to Thomson Financial/First Call. In the second quarter, ADC posted sales of $298.3 million.
The company expects reach breakeven results on $250 million in quarterly revenue by Oct. 31. Previously, the company had a target of $300 million.
Company Chairman and CEO Rick Roscitt says he was "surprised by the additional weakness in the third quarter." ADC is taking additional steps to achieve profitability. To cut costs, ADC plans to close some plants, shed some jobs and divest low revenue-generating product lines. The details of which plants and products will be sold and how many jobs will be cut are still be hammered out, according to ADC.
News of the revised forecast caused ADC's stock to slide. As of 11:58 a.m. EDT, ADC shares were down 15 cents, or 6.8 percent, to $2.07. The company warns that further adjustments to its forecast may be necessary as there are still several weeks left in the quarter ending July 31.