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Tellabs Announces Earnings, Cuts

LISLE, Ill. -- Tellabs today announced first-quarter sales of $772 million, up 21% from $639 million a year ago, driven by demand for Tellabs' core optical networking products. First-quarter net income amounted to $123 million, up 13%, from $108 million a year ago and diluted earnings per share were 29 cents, up 12% from last year (all comparisons to prior year in this release refer to the attached pro forma results of operations).

In light of reduced and deferred spending by major communications carriers, Tellabs will realign its cost structure with its current expectations for lower revenue growth. The company will further reduce discretionary spending, eliminate salary increases this year, institute a pay-cut for all corporate officers, align manufacturing capability with demand expectations, and terminate the SALIX next-generation-switching product effort.

As a result, the company will take a restructuring and other one-time charges in the second quarter for costs associated with reducing its workforce by about 550 people, consolidation of excess facilities, related fixed asset disposals, asset impairment and excess inventory. Tellabs also eliminated 450 temporary or contract positions during the quarter and will not fill 1,100 open positions. Total charges are expected to be in the range of $150 million to $225 million. On an annualized basis, the workforce-related actions are expected to reduce Tellabs' overall cost structure by approximately 5% to 6%. Tellabs now expects 2001 revenues of $3.6 billion to $3.7 billion; 2001 earnings per share are now expected to range between $1.55 and $1.65, excluding the goodwill from the acquisition of Future Networks Inc.

"These actions are unfortunate because they affect a lot of talented people," said Tellabs President and CEO Richard C. Notebaert. "By paring back our efforts in next-generation switching, we are aligning with our customers' priorities and strengthening our initiatives in high-growth areas such as optical networking. Despite the current challenges, I am as confident as ever in Tellabs' long-term prospects and our ability to deliver strong revenue and earnings growth in the future."

http://www.tellabs.com
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