Tellabs Sinks on $1B Loss

Tellabs recorded a $999 million third quarter net loss Tuesday as it announced a $988 million goodwill impairment charge, restructuring costs of $9 million, and further charges of $17 million. (See Tellabs Reports Q3.)

The vendor also announced revenues of $424 million, down 7 percent from a year ago but roughly in line with expectations.

Excluding most of those charges in its non-GAAP numbers, Tellabs managed a profit of $19 million, or 5 cents per share, slightly better than analysts had expected.

But there's worse to come. Tellabs says it's not expecting to see the usual seasonal fourth quarter hike in revenues. Instead it expects its fourth quarter revenues to be around the same, or worse, than the third quarter's revenues, providing a range of $400 million to $424 million. Analysts had, on average, been expecting revenues of nearly $441 million. Fourth-quarter gross margins are expected to be up slightly on the third quarter's 38 percent.

The company's share price fell $0.46, more than 11.7 percent, to $3.45 at the close of trading Tuesday.

Downsizing to focus
The restructuring charges recorded in the third quarter are just the start of a downsizing process that will see Tellabs ax 280 positions, or 8 percent of its staff, taking its headcount down from around 3,500 to about 3,220. The company will record charges of between $23 million and $27 million in the fourth quarter as it makes those cuts.

Tellabs says it will now concentrate its future investments on three main areas -- mobile backhaul, optical networking, and business services -- and invest more in its sales channels.

— Ray Le Maistre, International News Editor, Light Reading

bollocks187 12/5/2012 | 3:29:06 PM
re: Tellabs Sinks on $1B Loss Once a really good company.
paolo.franzoi 12/5/2012 | 3:29:05 PM
re: Tellabs Sinks on $1B Loss
It would have to be acquisitions (note the plural). They did not pay that much enterprise value for AFC, so even writing down all of AFC is not enough. Perhaps Vinci + Vivaci + AFC = enough.

gbmorrison 12/5/2012 | 3:29:05 PM
re: Tellabs Sinks on $1B Loss Which acquisition did they take this big impairment on?
materialgirl 12/5/2012 | 3:29:05 PM
re: Tellabs Sinks on $1B Loss While legacy vendors of core infrastructure are left to starve, telcos bitch about the lack of 100Gbps optical infrastructure. Where do they think it comes from? There is no money for development, and the people who know how to do it are increasingly unemployed. How broken can you get?
gbmorrison 12/5/2012 | 3:29:02 PM
re: Tellabs Sinks on $1B Loss I'm not an accountant so not sure if have my facts right on this, but I believe they write down the big loss here and then get to 'carry forward' those losses for several tax years, no?
paolo.franzoi 12/5/2012 | 3:29:00 PM
re: Tellabs Sinks on $1B Loss
Not 100% sure of your question. Are you asking about the loss as it applies to the income statement or about the loss and how it applies to the tax rate?

paolo.franzoi 12/5/2012 | 3:28:58 PM
re: Tellabs Sinks on $1B Loss
So, from a tax standpoint that can work. From an income statement standpoint it can not.

gbmorrison 12/5/2012 | 3:28:58 PM
re: Tellabs Sinks on $1B Loss The loss can be applied going forward, they call it carrying them forward. They can take those losses against future years taxable income and thus pay less later.
cw.774 12/5/2012 | 3:28:55 PM
re: Tellabs Sinks on $1B Loss you beat me to it, materialgirl
Sign In