Tuesday, July 18, 2006

ADC Issues Earnings Warning, Blames Slower Deployments Due to Carrier Consolidation

ADC cuts financial expectations for its third fiscal quarter, ending 28-July-2006. The company now expects sales from continuing operations in the third quarter of 2006 to be in the range of $330-$335 million and for fiscal 2006 year to be in the range of $1.280-$1.300 billion. Previous annual guidance provided on May 31, 2006, which included the estimated results for the APS France services business, was that ADC's fiscal 2006 year sales would be in the range of $1.350-$1.390 billion (approximately $1.320-$1.355 billion without the APS France services business.) ADC had not previously provided guidance on sales for the fiscal 2006 third quarter.

ADC blamed lower sales of copper and fiber connectivity products resulting from what it believes are short-term impacts of both customer consolidation activity affecting current spending rates and customers' current inventory levels being higher than current deployment rates.

"Given the current environment in which our larger wireline and wireless customers are consolidating and integrating operations, these short-term variations can be difficult to plan for and we do not believe they are reflective of the long-term prospects for our business. We are not alone in the industry with the current softening of the outlook for the remainder of our fiscal year. We still expect to grow our business year-over-year and remain confident that we can deliver long-term growth and profitability in our business," said Robert E. Switz, president and CEO of ADC.



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