Safety first: ADT Corp shares climb following fourth quarter earnings report

By Joe Musso


ADT Corp shares climbed Wednesday after the Boca Raton, Fla. based electronic security company reported fourth quarter revenues and earnings that surpassed analyst estimates.

For the quarter ended Sept. 26, net income fell 15 percent to $82 million, or 47 cents per diluted share, from $96 million, or 45 cents per diluted share in the year ago quarter.

The company’s net results were skewed by a variety of one-time items; excluding those factors, ADT’s adjusted earnings were 55 cents, substantially higher than the 48 cents Wall Street had been anticipating.

Per-share earnings were also affected by an 18 percent reduction in the number of ADT shares outstanding, reflecting a large-scale share-repurchase program the company carried out.

Revenues in the fiscal fourth quarter rose 4.4 percent to $883 million from $846 million a year ago.

“We delivered a strong finish to the year,” ADT Corp CEO Naren Gursahaney in a conference call this morning, driving another quarter of improved results in line with our most recent guidance and creating good momentum to drive profitable growth in the year ahead.”

Investors reacted positively: in mid- day New York Stock Exchange trading ADT shares were up $1.45 or 4.2 percent, at $37.12

The national electronic security provider attributed the decline in its net income – as measured on a dollar basis — to the high operating costs associated with being a standalone public company.   ADT was once a unit of Tyco International Ltd., but was spun off as a freestanding company in late 2012.

“Our strong brand recognition and sales efforts drove improved new subscriber growth in both our direct and dealer channels,” said Gursahaney. “Highlighting that we continue to win the marketplace and that our products and services remain in demand”

ADT Corp. officials said the company’s increased revenue, notable profit margins and significant return on investment, outweigh lagging net income results.

ADT is also expected to enter the promotional field in a more aggressive manner as a number of telecom and cable providers are now offering similar services at lower price points.

“They’re turning the corner in terms of trying to improve the quality of their new customer base,” said James Krapfel, a Morningstar stock analyst. “Customers are becoming a little more sticky due to the lowering of the initial costs of joining.“