Tellabs Issues Profit Warning
That's one helluva debut for new CEO, Rob Pullen. (See Tellabs CEO Says He's Not Scared of Change.)
The equipment vendor this morning reported first-quarter revenues of $464 million and net income of $17 million, or 4 cents per share on a GAAP basis. On a non-GAAP basis (before one-time costs and charges), the company earned $32 million, or 8 cents per share, giving it a non-GAAP gross margin of 39 percent.
On average, financial analysts had expected non-GAAP earnings of 4 cents per share from revenues of $453.7 million.
Tellabs also reminded the industry that while it is "discontinuing the Tellabs 8865 optical line terminal" -- a decision that now excludes it from Verizon's GPON rollout program -- it is "continuing development of the Tellabs 1100 GPON (gigabit passive optical network) multiservice access series. Tellabs will use freed-up resources to fund growth initiatives." (See Verizon's Going Strong on GPON.)
But analyst and investor attention will today be focused on the vendor's outlook for its second-quarter performance, which is set to fall way below expectations in terms of sales and margins.
On average, analysts had been expecting revenues of $474.9 million, but Tellabs says revenues are on course to be in the range of $425 million to $445 million, while non-GAAP gross margins are set to fall significantly quarter-on-quarter to 31 percent "as a result of product mix" –- that means a greater proportion of sales will come from the company's lower-margin products and services.
As a result, the company's second-quarter revenues will miss Wall Street's current target by between 6.3 percent and 10.5 percent.
The company's share price closed Monday at $6.02, but had already started to creep south in early pre-market trading on Tuesday morning –- at 7:23 a.m. Eastern Time it had dipped by 2 cents to $6.00.
Tellabs is hosting a conference call to discuss its financials at 8:30 a.m. Eastern today.
— Ray Le Maistre, International News Editor, Light Reading