Tellabs Inc. stock has fallen $1.47 (21%) to $5.57 this morning on an earnings report that disappointed even the pessimistic analysts.

For its fourth quarter, which ended Dec. 31, Tellabs reported revenues of $410.5 million and net losses of $11 million, or 3 cents per share. Analysts were expecting profits of about 8 cents per share, according to Thomson Reuters.

The real hit came with Tellabs's first-quarter forecast of $315 million to $335 million in sales. The analyst consensus was $402.7 million. Some analysts were predicting a miss, including Ehud Gelblum of Morgan Stanley, but even he shot high, expecting a forecast around $389 million.

Why this matters
People are still worried about how Tellabs is doing inside of AT&T Inc.. Gelblum specifically cited "continued weakness at AT&T" as the reason for his downbeat forecast.

In past quarters, AT&T has represented 20 percent of Tellabs's revenues, thanks largely to mobile backhaul. But signs in 2010 suggested Alcatel-Lucent could take a bite out of that business. (Ciena Corp. is AT&T's other backhaul provider.)

Tellabs did tell Light Reading in July that it's partnering with Juniper Networks Inc. to serve AT&T, but the company didn't elaborate at the time.

For more
Here's more on Tellabs' financial situation and the whole AT&T thing.

• Tellabs Posts Q3
• Rumor: Tellabs Masters Its Domain at AT&T
• AlcaLu, Juniper, Cisco Share AT&T Domain Status
• Tellabs on a Roll
• Tellabs Feels the AT&T Squeeze
• Tellabs Busts Out in H1

— Craig Matsumoto, West Coast Editor, Light Reading