ADC Telecom Warns

ADC (ADCT) shares dipped late Tuesday on soft guidance and concerns about an inventory buildup.

The Minneapolis-based networking gearmaker posted an adjusted profit of $37 million, or 28 cents a share, for the fiscal fourth quarter ended Oct. 31. Those numbers compare with pro forma earnings of 18 cents a share a year ago. Analysts were looking for an adjusted profit of 18 cents, according to Thomson First Call.

Total sales for the quarter were $307.4 million, up from $294 million in the same period a year ago. The analyst consensus called for sales of $303 million.

"In the face of challenging market conditions, we achieved year-over-year sales growth of 5% in the fourth fiscal quarter of 2006," CEO Bob Switz said in a press release.

But looking ahead, the company said it sees slumping demand for products like access gear related to the fiber expansion by the big phone companies such as AT&T (T) and Verizon (VZ). The company says it is uncertain how long its customers will take to work down their inventory levels.

The company also said some customers -- presumably AT&T -- have deferred spending as they await merger approval. AT&T is planning to merge with BellSouth (BLS).

As a result, ADC says it "expects sales in our first fiscal quarter of 2007 to be down from the fourth quarter of 2006 by around 15% due to the timing issues noted above."