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
Broadband $178.3 $202.1 -11.8%
Transport $129.7 $205.9 -37.0%
Services $53.7 $56.1 -4.3%
Total $361.7 $464.1 -22.1%

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
Broadband $34.3 $8.7 +294.3%
Transport $39.8 $79.2 -49.7%
Services $19 $13.7 +38.7%
Total $93.1 $101.6 -8.4%
* Profits = gross profit minus R&D expenses (as defined by Tellabs)

Second-quarter forecast
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

digits 12/5/2012 | 4:06:00 PM
re: Transport Sales Slump Hits Tellabs

Although the numbers are down sharply from a year ago, Tellabs did slightly better than expected -- as a result its share price has been heading north in pre-market trading, up 25 cents, or 5%, at $5.24.

bollocks187 12/5/2012 | 4:05:55 PM
re: Transport Sales Slump Hits Tellabs

With major cut backs and layoffs Tellabs is done as a company it is a question of time. For too long Tellabs Chicago style politics has ruined what was once a good thing. The only revenue groth products are developed on the West coast - and the mafia is always trying to kill these folks off.

C'mon Pullen stop 'pulling" everyones leg and really fix the corporate culture this time around if you succeed your the hero and stop using carrier spending as an excuse. Continue on the historically bad management 'Tellabs' culture path and you have no chance against the competition.


Sign In