business

ADC Telecommunications Inc. of Eden Prairie reported a 5 cents-a-share net loss for the fourth quarter, caused largely by write-downs in its stock portfolio related to the mortgage industry's problems.

But ADC exceeded Wall Street's expectations with non-GAAP earnings of 30 cents per share, 8 cents above a consensus of analysts.

Fourth-quarter revenue was $330 million, up 7 percent from the same period a year ago. ADC, which sells network infrastructure to telephone and cell phone companies, attributed the gains to demand for broadband consumer and business networks and for wireless networks.

For the year, ADC earned 96 cents a share, up 19 percent from 2006, on revenue of $1.3 billion, up 3 percent.

The fourth-quarter net loss included a charge of 23 cents a share for a $29.4 million loss in the value of ADC's stock portfolio. While part of the portfolio's decline was directly tied to mortgage companies, those troubles also had spilled over into the credit markets and thus affected nonmortgage companies also in the portfolio, said Jim Mathews, ADC's chief financial officer. ADC also took an 8-cent-per-share write-down for its $10 million contribution to its charitable foundation.

In a slow-growth telecom market where customer spending is hard to predict, ADC is doing well, said Christian Schwab, an analyst at Craig-Hallum Capital Group in Minneapolis. He credited ADC with generating slightly greater-than-expected revenue while controlling expenses and improving gross margins.

"In the current environment, ADC is doing about as good as you can do," Schwab said.

"The telecom industry is not a fast-growth environment, and we've been able to get more than our share," Mathews said.

The company will try to do the same in 2008, when spending by big telecom companies is expected to be flat, he said.

ADC predicted that in 2008 it would have net earnings of 68 to 78 cents a share on revenue of $1.45 billion to $1.475 billion.

ADC stock rose 20 cents Wednesday to close at $16.74 before the news was released. In after-hours trading, shares rose another 9 percent.

Steve Alexander • 612-673-4553