Tellabs Posts Q4 Loss
"This is still a sick industry," says Tellabs CEO Mike Birck. "The only thing that will bring this industry out of its funk is increased demand for services, whether it's broadband or something else."
One bright spot for Tellabs was its increased business outside North America: Half of the company's top 20 customers are outside the U.S. The company saw consecutive international earnings growth in both the third and fourth quarters of 2002, with the Asia-Pacific region being its strongest theater, according to Anders Gustafsson, president of Tellabs International.
"Tellabs cannot bide its time waiting for a turnaround in North America, waiting for this winter to turn to spring," says Birck.
Though Tellabs' progress abroad was encouraging, analysts remain skeptical that the company's increased efforts outside North America will enable it to spend more cash and settle for lower margins.
Tellabs reported fourth-quarter 2002 revenues of $313 million, up 9 percent sequentially. Though an improvement from its prior quarter, Tellabs' revenues were down from the $470 million it reported during the year-ago quarter.
The company's pro forma net loss for the quarter was $10.2 million, or 2 cents a share, compared to a pro forma profit of $14 million, or 3 cents, reported during the fourth quarter of 2001. Analysts expected that Tellabs would lose 3 cents a share on revenues of $283.3 million, according to Multex.com Inc.
Tellabs' actual net loss for the quarter was $84.5 million, or 21 cents a share, once all charges against earnings were added in. The company kept its operating expenses flat at $152 million for the quarter, and it ended the year with more than $1 billion in cash and investments. It also generated positive net cash flow of $12 million for the quarter and trimmed its headcount to 4,700 people.
Sales of Tellabs' optical networking systems totaled $122 million, down 54 percent from the $267 million in optical sales it reported a year ago. Sales of the Tellabs 7100 optical transport system, the Tellabs 6400 transport switch, and the Tellabs 6500 transport switch accounted for more than 7 percent of the company's quarterly revenues (see Touch America Touches Tellabs and Tellabs Sees Progress With 6400). The 6400 switch now has 15 customers, according to Tellabs chief financial officer Joan Ryan.
Tellabs reported $121 million in broadband access equipment sales, up nearly 5 percent from the $115 million reported for that segment last year. The company's voice-quality enhancement solutions group reported $18 million during the fourth quarter, while its services and other revenues were $52 million.
The company's full-year 2002 sales totaled $1.3 billion, compared to full-year 2001 sales of $2.2 billion, a drop of about 41 percent. Its pro forma net loss for the year was $16.5 million, or 4 cents per share, compared to 2001's pro forma profit of $149 million, or 36 cents a share.
Tellabs recorded an actual net loss of $313 million for the year, or 76 cents per share, compared to a loss of $182 million, or 44 cents a share, for the full year 2001.
The company's executives declined to give revenue guidance for the first quarter of 2003. In its press release, however, the company cautioned that it "expects to see more than a typical sequential decline in first-quarter 2003 revenues."
— Phil Harvey, Senior Editor, Light Reading