Transport Sales Slump Hits Tellabs
Give the Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) crystal ball team some credit: They said the first quarter would be tough going, and they were right. The equipment vendor today reported revenues of $361.7 million for the first three months of this year, down 22 percent from a year earlier.
That was within the company's forecast range of $345 million to $375 million, and slightly better than the $359.4 million that Wall Street had been expecting. Tellabs also exceeded earnings expectations, reporting non-GAAP profit (excluding certain one-time charges) of $22 million, or 6 cents per share, as a result of a higher than expected gross margin of 44.2 percent. Analysts had, on average, expected non-GAAP earnings of 3 cents.
Including all charges and costs, the vendor reported net income of $7 million, or 2 cents per share, so it has managed to stay in the black.
Tellabs unveiled its first-quarter forecast in January, when the company outlined its view of carrier capex plans. (See Tellabs Feels the Pinch and Tellabs: Carriers Cautious on Capex.)
And it's the spending habits of the North American carrier community that has hit Tellabs hardest. While revenues from international markets were almost identical to a year earlier at $114.7 million, sales from Canada and the U.S. came in at $247 million, down more than 29 percent compared with the first quarter of 2008.
The vendor's Transport segment was the hardest hit, suffering a 37 percent year-on-year decline in revenues.
Table 1: Tellabs Q1 2009 Revenues by Segment
|Revenues in millions||Q1 2009||Q1 2008||Change|
The Broadband segment, though, reported improved profitability as a result of increasing revenues from the vendor's wireless backhaul products, while sales of lower-margin product lines, such as the 6300 SDH transport platform and the 8100 multiservice product, declined.
Table 2: Tellabs Q1 2009 Profit by Segment
|Profits* in millions||Q1 2009||Q1 2008||Change|
|* Profits = gross profit minus R&D expenses (as defined by Tellabs)|
Tellabs expects its second-quarter revenues to be "flat to up by a high-single-digit percentage" compared with the first quarter. That gives a range of roughly $362 million to $395 million. Analysts are currently expecting second-quarter revenues of around $375 million.
— Ray Le Maistre, International News Editor, Light Reading