Transcript Slide 1

Enabling the Future Network
® Adtran, Inc. 2012 All rights reserved
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ADTRAN at a Glance
 Broad Portfolio of Solutions
– More than 1,700 products
 2011 Revenues - $717 million
– Carrier Division - $569 million
– Enterprise Division - $148 million
 Strong Financials
– Over 20 years of continuous
profitability
 1,750 Employees
 Global Presence
– Headquartered in Huntsville, AL
– Development centers:
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® Adtran, Inc. 2012 All rights reserved
Phoenix, AZ
Ottawa, Canada
Mountain View, CA
Hyderabad, India
Boston, MA
NSN BBA Acquisition
ADTRAN Headquarters, Huntsville, AL
NASDAQ: ADTN
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Global Market Trends
 Broadband / Ethernet Access
– Exponential growth in bandwidth access
– IP traffic will increase 4x over next five years
– VoIP proven and continues significant growth
 Mobility
– Mobile data demand growing 15-25x over
next three years
– Users have growing number of end-points
 3 to 5 devices per person
 Smartphone, iPad, laptop, machine-tomachine
 Cloud Services & Applications
– Shift to cloud computing drives demand for
Enterprise and SMB connectivity
 Virtualization
– Applications running on virtual machines increase efficiency, reduce
space and carbon footprint
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New Devices and Applications
 New Mobile Devices
– iPad, tablets, smart phones, etc..
 New Applications
– Video, gaming, etc..
– Cloud services
– Voice over Wi-Fi
 Major Usage Changes
– Netflix is now 30% of Internet traffic
– Over 50% of the 800M Facebook
users are active daily
– Over 350M users access Facebook
on their mobile device
– Two-way video chat
 Skype
 Apple’s Facetime
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Mobility Demand is Exploding
 5B Mobile Phones Globally
 Smart phones are
Pervasive
 True Mobility is no Longer
a Convenience
– Voice over Wi-Fi, Facetime
 New Devices Rely on
Wireless Connectivity
– iPads
 Mobile Data Traffic is
Growing Exponentially
 Wi-Fi Data Offload to Fixed
Network is Necessary
Source: FCC
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Cloud is the Future
Cloud services level the playing field
for businesses of all sizes and deliver
global scalability
 IDC estimates the market
for public cloud products and
services will grow to $56 billion by
2014
 Amazon’s S3 Cloud Storage
Service skyrocketed from 262 billion
in 2010 to over 566 billion in 2011
– Over 370,000 requests per second
 Small business public cloud
computing spending is estimated to
reach $6 billion by 2014
– (Source: In-Stat - December 2010)
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ADTRAN Areas of Focus
 Broadest Portfolio of Broadband Solutions
– Fiber-to-the-Home/Node/Curb, Ultra Broadband
 Mobile Infrastructure
Broadband
– Fixed access from exchange to cell tower
– Optical access, Carrier Ethernet access,
Broadband access
 Cloud Connectivity
–
–
–
–
Mobility
Enterprise converged access
Hosted service provider solutions
Carrier Ethernet, broadband connectivity
Virtualization enables unlimited scalability
Cloud
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ADTRAN – Complete Connectivity
Exchange
Provider’s Access
Infrastructure
Business & Residential
Customers
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ADTRAN – Complete Connectivity
• Broadband Access
Industry’s most widely adopted access platform
• Ethernet Aggregation
Cost-effective for high-density Ethernet deployment
Exchange
• Optical Access
Specifically designed for the access edge
Redefining the packet optical edge
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ADTRAN – Complete Connectivity
• Mobile
Backhaul
Efficient fiber
Ethernet services
• Business Ethernet Services
Full range of service rates and
service reach
• Business Service Migration
Extend product lifecycle
Provider’s Access
Infrastructure
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ADTRAN – Complete Connectivity
• Cloud Connectivity
Industry leadership in service provider bundles
• Enterprise Communications
Solutions which enable businesses to become more
capable and efficient
• Virtual Mobility
Complete end-point freedom throughout the Enterprise
• Residential
Deliver Ultra Broadband
for premium services
Business & Residential
Customers
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Core Product Performance
$600
$500
Internetworking
Optical Access
Broadband Access
36%
growth
$Million
$400
48%
growth
$300
25%
growth
$200
65%
growth
$100
ADTRAN Core Products
$600
$0
• Solid performance in
Core Products
• Broadband Access
• Optical Access
• Internetworking
$500
2011
Millions
2010
$400
$300
$200
$100
$0
2006
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2007
2008
2009
2010
2011
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Broadband Access Opportunity
Market Characteristics
• Carrier consolidation
‒ Releases investment
• Competitive push by
non-wireless carriers
• Government mandates
‒ US
‒ Other regions
• Over the top video
• Continual bandwidth
upgrades
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Ultra Broadband
Fiber to the Home
Premium internet and
video to more customers
at the lowest TCO
Ultra flexible, high
capacity deep fiber
solutions
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Core Product Growth – Broadband Access
ADTRAN's Broadband Access Performance
• Proven market share
growth (2007-11)
• Increasing demand for
premium internet, video
delivery and business
services
• Leveraging healthy
forecast for high-speed
services globally
$300
Million $
$250
$200
$150
$100
$50
$2007
2009
2010
2011
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
2011
MSAP
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2008
ADTRAN's Broadband Addressable Market
Equipment Revenue ($ B)
– #1 DSL & MSAP in NA
– #3 DSL Globally
– #4 MSAP Globally
$350
DSLAM
2012
GPON OLT
2013
2014
Ethernet FTTH
UBE
Source: Infonetics
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Internetworking Opportunity
Market Characteristics
Cloud Connectivity
• Rise of Cloud Services
Market Leadership in
public and private
cloud connectivity
‒ Public & Private
• More Communications
Enabled Business
Processes
Enterprise
Communications
Premises-based
solutions enabling
business productivity
‒ Unified Communications
• Explosion of Mobile
Devices
‒ End-user (not IT) dictates
the device
‒ Demand for bandwidth
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Virtual Mobility
End point freedom
across the Enterprise
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Core Product Growth – Internetworking
ADTRAN's Internetworking Performance
• Proven market share
growth (2007-11)
$140
$120
Millions $
– #1 Cloud Connectivity
– #1 SIP Trunking
– #2 Access Routers
$160
$80
$60
$40
• Market Leadership in
Carrier Bundled
Business Services
$20
$2007
$12
2008
2009
2010
2011
Internetworking Addressable Market
$10
Addressable Market ($B)
• Highly Differentiated
Virtual Wireless LAN
and Unified
Communications
$100
Carrier Ethernet
Wireless LAN
$8
Enterprise Security
$6
IP Business
Gateways
Routers
$4
Unified
Communications
Managed Ethernet
Switches
$2
$2011
2012
2013
2014
Source: Infonetics
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Optical Access Opportunity
Market Characteristics
• Massive Traffic Growth
‒ Limitless Optical Capacity
• Simplified Operations
‒ Optical Ethernet
• 5B Mobile Devices
Worldwide
‒ Computer on your hip
• Mobile Broadband
‒ Exponential Bandwidth
Requirements
Optical
Networking Edge
Right-sizing Packet
Optical to reduce
complexity at the
network edge.
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Mobile Backhaul
Enabling the promise
of Mobile Broadband
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Core Product Growth – Optical Access
ADTRAN’s Optical Access Performance
• Expanding Optical
Addressable Market
$80
Millions $
– SONET  WDM
– Access & Transport
– U.S.  Global
$100
– ONE differentiation pulls
through sales in
Broadband Access
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$2007
2008
2009
2010
2011
ADTRAN's Optical Addressable Market
$2.0
$1.6
Billions $
• Pull-Thru Revenue
$40
$20
• Growing Market Share
– Highly Differentiated
Solutions - ONE
– Reducing Network
Complexity
– Accelerating Services
Delivery
$60
$1.2
$0.8
$0.4
$0.0
2011
2012
2013
2014
Source:
Infonetics
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International Growth Progress
2011 Revenue Contribution
11.8%
International
International Growth
90
Domestic
88.2%
80
165%
Growth
70
60
50
Revenue 40
($M)
30
215%
Growth
20
10
2010
2011
2010
2011
0
Quarterly YoY Change
YoY Change
Q4 2011 over Q4 2010
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Planned Acquisition of NSN’s BBA Business
 ADTRAN announced that it plans to
acquire Nokia Siemens Networks
Broadband Access (BBA) business
 NSN BBA business includes
– MSAN, GPON, DSLAM and related
Network Management Solutions and
associated IPR
– Incumbent customer base of carriers
across >20 countries in Europe, Middle
East, Africa, India, Russia and Asia
– Strong team of sales, service, support,
and engineering
 Acquisition is anticipated to close by the
end of April 2012
 Advances ADTRAN’s Top Tier Global
Supplier status in fixed broadband access
 EPS neutral for first full year, accretive
thereafter
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Purpose of Acquisition
 Accelerates strategic plan for global
growth
- Incumbent supplier to top Carriers across
the globe, including DT, Bezeq, Sunrise
and others
- Regional Diversity
 Complementary product portfolios
- Strong global MSAN Solutions
- ADTRAN adds Carrier Ethernet, Ethernet
Business Services, Mobile Backhaul,
Enterprise solutions…
- NSN BBA adds MPLS, H.248, ETSI
voice, global services…
- Combined portfolios deliver compelling
global roadmap
• Strengthens Engineering and Services
resources to focus on global accounts
• Provides word-class sales, services and
customer support
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ADTRAN Customer Focus
NORTH AMERICA
EUROPE
ASIA
AFRICA
SOUTH AMERICA
AUSTRALIA
ANTARCTICA
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NSN BBA Customer Focus
NORTH AMERICA
EUROPE
ASIA
AFRICA
SOUTH AMERICA
AUSTRALIA
ANTARCTICA
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Combined Customer Focus
NORTH AMERICA
EUROPE
ASIA
AFRICA
SOUTH AMERICA
AUSTRALIA
ANTARCTICA
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Top Tier Global MSAP Ranking – Ports
Global – MSAP Category (Port Shipments)
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Source: Infonetics Q3 2011 Report
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Top Tier Global DSL Ranking – Revenue
Global – DSL Category (Revenue)
® Adtran, Inc. 2012 All rights reserved
Source: Infonetics Q3 2011 Report
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Annual Revenue and EPS
EPS: 2007-2011
Revenue: 2007-2011
($ millions)
$2.12
$717
$1.78
$606
$501
$477
2007
2008
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$1.22
$1.10
$484
2009
2010
2011
2007
2008
$1.17
2009
2010
2011
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Return on Invested Capital and Economic Value Added
Spread (trailing twelve months)
ROIC
EVA Spread
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
-5.00%
-10.00%
-15.00%
-20.00%
-25.00%
-30.00%
ADTRAN
Cisco
Ericsson
Fujitsu
Alcatel
ZTE
Westell
Tellabs*
Calix
Ciena
Zhone
*Adjusted for nonrecurring tax items.
Information derived from Bloomberg as of January 1, 2012
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28
• Highly Differentiated
Solutions That Deliver
Immediate Business
Results
• Large Growth Markets
• Strong Company
• Solid Performance
• Global Presence
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