ADC Telecom shares fall on revised outlook

Shares of ADC Telecommunications Inc. dropped Wednesday after the communications equipment maker lowered full-year earnings and sales expectations on lower demand.

Shares fell $3.07, or 23 percent, to close at $10.30 after hitting a 52-week low of $9.70 earlier in the session.

ADC said Tuesday it now expects earnings of 18 cents to 26 cents per share for the fiscal year ending Oct. 31, well below its previous guidance of 31 cents to 39 cents per share.

The company lowered its sales outlook to between $1.5 billion and $1.52 billion, from prior estimates of $1.52 billion to $1.54 billion. Year-over-year sales growth now is estimated at 13 percent to 15 percent.

ADC said its revised outlook largely reflects lower U.S. sales of copper and fiber connectivity products as customers review their budgets and adjust ordering. That also has affected demand for ADC products used as components by other equipment manufacturers.

Nonetheless, analysts at Merriman Curhan Ford reiterated the bank's "Buy" recommendation.

"While the miss is likely to stoke further concerns about reductions in U.S. carrier spend, we believe this magnitude is not indicative of any notable change in spending patterns," the researchers wrote Wednesday, adding that the company likely will remain profitable with double-digit revenue growth.