There's Crosstalk on the Telecom Line

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If investors are hearing crosstalk on the air today, it's because the networking industry is sending mixed signals.

Networking equipment maker ADTRAN (NAS: ADTN) just reported $175 million of fourth-quarter sales, right in line with analyst estimates. Moreover, earnings trumped the Street's best guess by $0.08 per share, or 17%.

That report strikes a sharp contrast against rival Juniper Networks (NAS: JNPR) , which presented a gloomy preliminary report last week and blamed American telecoms for its troubles. Juniper investors are taking heart at ADTRAN's good news, sending share prices up by nearly 4%. But, the larger company still couldn't match ADTRAN's own 8% jump.

So how did little ADTRAN manage such a great quarter while larger and richer competitors couldn't? Well, CEO Tom Stanton says that broadband access and Internetworking products led the way with 49% and 37% year-over-year growth, respectively. Those divisions feed directly to telecom customers with equipment for last-mile customer connections and a portfolio of unified communications solutions.

And guess what? This means that Verizon Communications (NYS: VZ) and AT&T (NYS: T) probably drove ADTRAN's gravy train. In other words, Juniper can cry all it wants about a weak market for American telecom equipment -- but it actually looks more like that company is losing market share to ADTRAN and others.

So I'll jump off my soapbox regarding reticent telecoms for a while. What looked like slovenly infrastructure upgrades at first glance now just looks like shifting market shares among the equipment providers. If you appreciate Verizon and Ma Bell for being tremendous dividend payers, you should check out this free report on 11 rock-solid payouts in telecom and beyond. It's free, but only for a limited time. Get yours right now.

At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies mentioned. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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