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More notes on the Ciena-ing of Tellabs

TLAB Shakeup Coming

Phil Harvey
The Philter
Phil Harvey
4/24/2008
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12:15 PM -- Argus Research Co. analyst Jim Kelleher had a great observation in his research note yesterday:

In coming months, we expect CEO Pullen - after a complete assessment of operations - to announce a substantial downsizing at Tellabs, as he seeks to shift the company into a network specialist role akin to the role developed by Ciena.


This fits nicely with what I wrote just after Tellabs announced it wouldn't be supplying GPON gear to Verizon.

Tellabs won't sell itself. And who'd buy it anyway?

  • The 5500 is coal-powered.
  • The 8800 is being lapped by its competitors.
  • The two biggest broadband access accounts delivered via the AFC acquisition -- BellSouth and Verizon -- are now toast.
CEO Rob Pullen could really make a name for himself here. The company has no debt. It has more than $1 billion in cash and investments. If it does some downsizing and embraces the role of network specialist, it might look a lot different this time next year.

Again, look at Adtran and Ciena. Those companies are pretty easy to size up. They're not good at everything; they're good enough at enough things.

Should Tellabs:

  • Put more resources behind its optical transport and ROADMs?
  • Buy Aktino, Hatteras, or something like it?
  • See if it can get $5.25 a share from Nokia-Siemens?
What would you do?

— Phil Harvey, Editor, Light Reading

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berty
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berty,
User Rank: Light Beer
12/5/2012 | 3:42:32 PM
re: TLAB Shakeup Coming
Phil, the fundamental problem with TLABs is their chance of remaking themselve has now gone. They had a chance after acquiring AFC and some others to set themselves on a path of a remake, but that has clearly failed. Their primary bread and butter business cross connects is in decline and unless they find some thing new and revolutionary for the network they will experience a slow and painful death. They will be the 3com of telecoms, plenty of money in the bank but no new ideas.They could be acquired but who would buy something that has declining revenue. They could buy some new technology but this will cost a lot of cash and most likely not be new and revolutionary.Their time has gone.The new management with their visibily mature board can only pull costs out of the company to delay the decline.Berty
USA
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USA,
User Rank: Light Beer
12/5/2012 | 3:42:21 PM
re: TLAB Shakeup Coming
One problem is that they have a significantly overpaid group of employees that cannot be sustained by their anemic product portfolio. Maintenance fees on the Titan DACS ainGÇÖt gonna cut it.
ponguy
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ponguy,
User Rank: Light Beer
12/5/2012 | 3:42:20 PM
re: TLAB Shakeup Coming
This is a very tough question for them. Their execution on the outside people brought in has been so poor so who is going to come up with the new ideas-and implement them? AFC aquisition (CEO and 8 of 9 VP's gone within 3 months), Asghar Mostafa (Vinci founder/CEO) leaving, Vivace Sr. team leaving, and now Krish/Carl's departures has left them with the same people who have been there a long time and not succeeded on anything new. So they respond by turing to an insider who in his 23 year career has never seen the outside world from another view but Tellabs. Can they even think differently enough to have success if they were to find the right niche?...Good Luck
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