As ADC Telecommunications (NASDAQ:ADCT) warned us back in early October, its fiscal fourth quarter wasn't quite so strong. Looking ahead, though, there might be some valid reasons for a bit of optimism regarding this global telecom infrastructure vendor.

Essentially in line with guidance, ADC reported that sales rose 14% to $302 million in the quarter. Excluding acquisitions, the growth rate was about 10% -- far less impressive than the growth in the third quarter, I'll grant, but a lot of companies would be pretty pleased with a "bad" quarter of 10% growth. Anyhow, there was good growth in global connectivity, but wireless access revenue was flat as expected.

Gross margin eased off, and a series of amortization, write-off, and restructuring/impairment charges did a number on the operating line as well. As a result, operating margin fell to below 2%, and income from continuing operations fell to $2.5 million from $15.6 million. If you opt to add back those charges for both periods (as many analysts will), operating margin improved a bit (7.9% vs. 7.2%) and income from continuing operations was up about 10% to $21.6 million.

My valuation models aren't suggesting a whole lot of upside in the shares, but that's due in part to a somewhat uncertain outlook for growth. I'm still using relatively conservative inputs for growth, but I'm beginning to warm up to the notion that the next couple of years could be stronger for ADC than a lot of people seem to think.

First of all, Verizon (NYSE:VZ) is making a very serious push with its fiber initiative and expects to double the number of homes passed in 2006. Likewise, both AT&T (NYSE:T) and BellSouth (NYSE:BLS) have sizable goals as well. Add in some overseas business from Deutsche Telekom (NYSE:DT) and Telstra (NYSE:TLS), to say nothing of the possibility of further customer wins, and you have a near-term outlook with some meaningful potential.

Of course, spending can stop almost as easily at it starts, and I would imagine (or is that hope?) that carriers learned their lessons from the spending gluts of six or so years ago. Still, I believe ADC should see increasing revenue and should be able to leverage that into better margins and accelerating earnings. While there are enough ifs, shoulds, and mights to make this one suitable mainly for risk-tolerant investors, it may still be worth a more in-depth look.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).