ADC loses $1 billion

ADC Telecommunications recorded a $1.05 billion net loss for its fiscal second quarter and said revenue growth would be flat in the next two quarters as the carrier spending slowdown continues to hit the company hard.

ADC also said its current quarter would not be profitable, as it expects earnings per share in the range of breakeven to a 5¢ loss. The company’s shares dropped 16% by market close to $8.60.

ADC’s net loss was $1.05 billion, or $1.33 per diluted share, for the second quarter ended April 30, compared to net income of $718.3 million, or 96¢ per share, in the year earlier period.

Excluding charges of $930 million, ADC reported a pro forma net loss of $115 million, or 15¢ per share, compared with income of $72 million, or 10¢ per share, in the year-ago quarter. The operating loss exceeded the estimates of analysts surveyed by First Call/Thomson Financial by 2 cents.

Revenues declined 15% to $652 million from $771 million a year ago, with sales of broadband and infrastructure access products off 24% and international sales increasing 3%.

The company is executing a restructuring program that will eliminate 7,000 jobs and shed non-core businesses. ADC wants to cut an additional $50 million in the second half in an effort to return the company to profitability.

“We are taking aggressive actions to achieve more cost-efficient operations,” said a statement by Richard R. Roscitt, ADC’s chairman and CEO.

According to Roscitt, demand for ADC’s core products has stabilized, even though gross margins fell by almost half from the year ago quarter to 23.1%.

The $930 million one-time, after-tax charges included large write-offs for restructuring and the write down of the book basis of various equity investments in ADC’s portfolio. The company also increased operating reserves to cover additional inventory and bad debt.