Tellabs Names Prabhu as New CEO

Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) has appointed 49-year-old Krish Prabhu as its new CEO, taking over from Michael Birck, who remains as chairman (see Tellabs Appoints New CEO).

Prabhu, who joins from VC firm Morgenthaler Ventures (see Prabhu Joins Morgenthaler), was formerly COO of Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and CEO of Alcatel USA.

Birck, a founder of Tellabs, announced his intention to step down from the role last year (see Tellabs CEO to Retire... Again). He had taken over from Richard C. Notebaert, who vacated the CEO's chair after only 22 months to join Qwest Communications International Inc. (NYSE: Q) in June 2002.

Now Birck sees Prabhu as the man to take Tellabs to a new level. The industry is showing signs of recovery, Birck told a conference call, "and it's time for a transition at Tellabs. We need someone that can make that happen. Krish is that man."

While his appointment is expected to herald a greater shift towards data networking and a lesser focus on the company's traditional optical systems, Prabhu would not be drawn on any strategy details.

He did, however, note that while Tellabs has "a great product portfolio, it's been around a while," and that he saw certain trends in the telecom sector that needed to be addressed.

"Transport and access will blend, wireline and wireless will converge, and there is a transition from [traditional networks] to packets. The industry is undergoing a transition in front of our eyes, and we will need to change." That change will involve an evolution of the existing business, and could include acquisitions.

Prabhu would not elaborate on any M&A possibilities, saying only that if the company needs to "broaden its playground, we'll make the right move at the right time."

Tellabs has been linked with a number of potential targets recently that could take the company into the access space (see M&A's New Currency and Tellabs Angling for Access – and AFC).

As for ongoing growth of the existing business, Prabhu notes that the industry still has strong cashflows that provide significant opportunties to "grow and make lots of money."

And Tellabs is currently making some money from the noted transition towards packet networks. In its most recently reported quarter the company recorded a surge in demand for legacy products that support VOIP deployments, and this helped the vendor to post an increase in revenues (see Tellabs Has a VOIP Secret ).

Investors will be hoping for more of the same and a long-term strategy that will help Tellabs back to profitability. The company recorded a net loss of $242 million on revenues of $980 million in 2003 (see Tellabs Q4 Revenue Up 14%).

The key to success, believes Prabhu, is experience and timing. "Tellabs has a great brand, and understands the industry. It knows how to deliver to its customers." But it's vital to also have a vision, says Prabhu, and to have that vision early. It's important, he says, not just to have the right products but to be able to launch them into the market early.

The former Alcatel man has been busy gaining wide experience during his time at Morgenthaler, sitting on the board of a number of equipment vendors, including one of Tellabs' potential acquisition targets, Catena Networks Inc. (see Prabhu Joins Catena Board, Agere Adds to Board, Overture Raises $15M, ECI Puts Prabhu on Board, and Krish Prabhu Joins Westwave ).

The appointment is not the only senior management change at Tellabs in recent weeks (see Nulty Leaving Tellabs and Ed Kennedy Leaving Tellabs).

Having risen 26 cents yesterday to close the day at $10.20, Tellabs's share price is up another 9 cents in early morning trading at $2.29.

— Ray Le Maistre, International Editor, Boardwatch

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Lite Rock 12/5/2012 | 2:27:21 AM
re: Tellabs Names Prabhu as New CEO Krish was a good engineer, but he was clueless about how to manage and organize a company. He did a very poor job at integration of aquisitions starting with DSC.

What had been one of the great telecom companies to do business with was trashed along with many great people.


glasstotheass 12/5/2012 | 2:27:22 AM
re: Tellabs Names Prabhu as New CEO The 6500 was supposed to be a hybrid data/circuit DXC. It's still around, but never really made it off the ground. (too expensive)

I wonder how Ocular will fare now that their "Golden Boy" is gone?

opticalguy 12/5/2012 | 2:27:24 AM
re: Tellabs Names Prabhu as New CEO KP will certainly make a difference at Tellabs. Tellabs has a great history int he DXC space. It's now time to take the DXCs to the next level and add data. Any good M&A candidates out there that have a platform to fill this hybrid DXC and data space?

opticalweenie 12/5/2012 | 2:27:25 AM
re: Tellabs Names Prabhu as New CEO so what do the folks still left
at tlabs think about this?

Mezo 12/5/2012 | 2:27:27 AM
re: Tellabs Names Prabhu as New CEO I agree with you...ah...lord...ah...that makes me kinda uncomfortable...

Krish is excellent and has the best shot at turning Tellabs around.

He's a hell of a good guy...sorry lord...I mean an angel investor...ah...ok, he's a talented leader for Tellabs.

coreghost 12/5/2012 | 2:27:28 AM
re: Tellabs Names Prabhu as New CEO I agree that he will create havok, but I dont
see havok as being in tellabs best interests.

And his judgement with acqusitions is really
bad. I can see him rushing out to buy Caspian
or riverstone without even looking at at what
he is getting. He would go for Caspian, if
for no other reason, than to prove to his
former VC partners what a great investment
it was.

He can crush the hangers-on at Tellabs, but
he has his own set of people who are as bad
or worse. The only experience those people
have is in EOL, cutting budgets and shutting
down an entire organization in an endless series
of layoffs.
OrderedSemaphore 12/5/2012 | 2:27:30 AM
re: Tellabs Names Prabhu as New CEO
"This guy made ALA happen in the US and it's never been the same since he left"

How about...

"This guy made ALA happen in the US and it's never been the same since"

ALA suck, they ruined N startups, they have no clue about IP, Xantium is a joke, whose sorry now, yadda yadda yadda.

Good DSL gear, though.

Ho ho ho.

Yours truly,
Disgruntled Ex-Startup Employee.
alcabash 12/5/2012 | 2:27:30 AM
re: Tellabs Names Prabhu as New CEO KP will fail at the day-to-day cost cutting required at Tellabs and McCarthy has already proven inept at that task, so KP will bring a hatchet man from Alcatel.

KP is not good at running a steady business, he failed at Alcatel on leveraging the Rockwell SONET success, he is really good at spinning new strategies and Wall Street likes him.

Brace for M&A, KP is too smart not to realize that Tellabs is on a slow death spiral... and SONET will not save them. Vivace came too late and is too small anyway.

wilecoyote 12/5/2012 | 2:27:32 AM
re: Tellabs Names Prabhu as New CEO KP will crush Gary Smith and the rest of the Nortel alumni. Time to short ALA, CIEN, NT, LU.

Excellent choice for TLAB. This guy made ALA happen in the US and it's never been the same since he left. Yeah, he isn't perfect, who is, but given a US based, large company with lots of cash, this guy will wreak havoc.
dodo 12/5/2012 | 2:27:42 AM
re: Tellabs Names Prabhu as New CEO EOM
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