Howard Thrailkill

Listening to Howard Thrailkill's deep Southern drawl, it's hard to imagine him getting ruffled about anything — economic slump notwithstanding.

“In some ways we welcome these kinds of pauses,” says Thrailkill, president and chief operating officer of Adtran. “In all the ones we've experienced in the past, we've emerged in a stronger position than when we went in.”

Thrailkill's ability to take the market in stride may stem partly from the fact that he, like many of his executive peers, has experienced this cycle before. “It's almost like the tides going in and out,” he says.

Water metaphors come up frequently when talking to Thrailkill, which might seem surprising given that Adtran is headquartered in land-locked Huntsville, Ala. (unless you count the Tennessee River). But as the leader of a relatively small access equipment developer, Thrailkill almost has to take a Zenlike outlook on the market.

“We see the deep current of that river rushing by us, and even though there might be eddy currents and backflows here and there, we're undeterred by all that.”

Thrailkill acknowledges that Adtran has been negatively affected by the unstable carrier sector. “Situations in which five or six CLECs may be trying to position themselves in the same geographic area — a lot of that was nonsense, obviously,” he says. And given that part of its business model has been to sell to competitive carriers, it may seem that vendors such as Adtran are in trouble as a significant part of the marketplace disappears.

But Thrailkill points to Adtran's significant incumbent customer base, which includes Verizon, BellSouth and SBC Communications. “We have tried to focus our attention on those who appear to have a significant share of market and have adequate financing,” Thrailkill says. “We're being very selective in how we're addressing the market.”

Adtran's sales actually went up 5.8% in the first quarter of this year, compared with Q1 2000. However, Adtran also had a substantially lower gross margin than predicted. The company increased its size in anticipation of revenues that simply did not materialize.

Thrailkill says Adtran was one of the first companies to predict the market downturn when it issued a less-than-rosy fiscal report last December. “We got thrashed for having said so,” he says. “Well, since we did that we've been given some credit for being forthcoming.”

In the end, Thrailkill will rely on Adtran's conservative balance sheet — which perhaps reflects the conservative culture of the deep South — and expects that a more stable market will ultimately prevail. “We see the market becoming much more rational now,” he says. “Rollout of the infrastructure is starting to take a much more sensible path.”