Tellabs to Restructure, Cut 530 Jobs
Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) has succumbed to increasing market pressure and initiated a restructuring process that will see the company focus on its packet optical products, mobile backhaul systems and Service Provider Information Technology (SPIT) capabilities.
As a result of the downsizing, about 530 staff (around 16 percent of its total headcount) will be laid off and the company will take a restructuring charge of about US$107 million. The company previously announced job cuts in July 2011. (See Tellabs Cutting 10% of Staff.)
Tellabs currently has 3,250 staff. It still has 125 jobs to cut from its previously announced reduction and will now axe a further 530. The company tells Light Reading, though, that it also plans to hire 105 new staff, which will bring its post-restructuring headcount to around 2,700.
The restructuring decision comes amid what Tellabs CEO Rob Pullen describes in the company's official announcement as "a climate of economic uncertainty." (See Maybe AT&T Won't Accelerate Capex and Tellabs Slowdown Surprises Street.)
That climate hammered the company's revenues and profits in 2011. For the full year Tellabs reported revenues of nearly $1.29 billion, down 21.7 percent compared with 2010, and a net loss of $188.4 million compared with a profit of $155.6 million the previous year.
In the fourth quarter, Tellabs generated revenues of $316.8 million, down 22.9 percent from a year earlier, and posted a net loss of $4.9 million, better than the $10.9 million the vendor lost a year earlier. Some other vendors, but not all, also found the final quarter of 2011 tough going. (See Juniper's Q4 Got Even Worse, Acme Packet Revises Forecast and Adtran Shows Its Mettle.)
For the first quarter of 2012, Tellabs expects revenues of between $260 million and $290 million, lower than the $297.7 million that financial analysts, on average, had been expecting.
As part of its refocus, Tellabs says it will "stop new development work on the Tellabs SmartCore 9100 LTE product, while continuing to support Tellabs SmartCore 9100 WiMax customers." That wireless core platform was acquired by Tellabs in October 2009 for $165 million. (See Tellabs Tees Up LTE EPC and Core Blimey! Tellabs Buys WiChorus.)
The portfolio focus will now be on the company's mobile backhaul and packet optical "solutions" and its Insight Analytics network performance management tool plus associated professional services. (See Orange Moldova Backhauls With Tellabs, Tellabs Smartens Up Its Routers, Tellabs Scoops Two Russian Backhaul Deals , Tellabs Could Seek Optical Redemption and Packet Optical Dips in Q3.)
Tellabs, of course, is not the only vendor to slim down and focus on areas of core competency in an effort to survive. (See NSN to Cut 17,000 Staff and NSN Unveils Its Kill List .)
— Ray Le Maistre, International Managing Editor, Light Reading