Shares of Atkore, a leading electrical-products maker, tumbled in morning trading following the company's announcement of a nearly 16% decline in sales for the fiscal fourth quarter. Atkore attributed this drop to soft demand from its telecommunications customers.
As a result of the news, Atkore's stock slipped by 7% to $126.07. However, it is important to note that shares are still up more than 11% for the year.
Both the company's adjusted earnings and sales figures for the quarter ended September 30 were below analysts' expectations, as reported by FactSet.
Telecom Industry Challenges
During a conference call with analysts, Chief Financial Officer David Johnson highlighted the clear slowdown in demand from the telecom industry. He explained that the market and channel are currently dealing with elevated inventory levels and facing timing challenges related to government stimulus funding.
Delays in Broadband Network Expansion
One noteworthy factor contributing to the decline in demand is the delays in broadband network expansion projects. The federal government has allocated billions of dollars to support telcos in their efforts to build out broadband networks and provide high-speed internet to rural areas. However, these projects are taking longer than anticipated to materialize.
Impact of Solar-Energy Market
In addition to the telecom industry challenges, Atkore also faced difficulties due to an oversupply of solar-energy products in the market. This surplus put pressure on prices and negatively affected the company's performance.