ABN-AMRO raises ADC Telecom estimates

ADC Telecommunications Inc. (Nasdaq: ADCT) got a bit of good news Monday when ABN-AMRO raised its fiscal 1999 earnings estimate and reiterated its "buy" recommendation.

Analyst Kenneth Leon bumped the 1999 earnings estimate from $1.35 a share to $1.37 a share even though the telecommunications provider reported lower-than-expected sales in its latest quarter.

"We are pleased with the quarter and are reviewing our model for any changes of growth assumptions in the lines of business," Leon wrote in a research note. "We are comfortable with our current estimates, but there could be potential for upward revisions after further review."

In its third quarter, ADC Telecom easily topped analysts' estimates, on sales of $444 million, slightly less than expected.

There's also a sense that ADC is having difficulties finalizing an important contract with telecom titan AT&T Corp. (NYSE: T).

Analysts were also unnerved by the fact that it spent only $35.8 million on research and development in the quarter, down from $38.5 million in the year-ago quarter.

On Monday, the stock closed off 1 1/4 to 40 1/16.

Its shares peaked at 53 5/8 in June after falling to a low of 15 3/4 in October.

Eighteen of the 23 analysts following the stock maintain either a "buy" or "strong buy" recommendation.