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Tellabs Warns; Shares Recoup Losses

Shares of Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) showed surprising strength after the company preannounced disappointing first-quarter results on Wednesday.

Tellabs shares had been down as much as 3, or six percent, in the morning, but recovered toward the end of the day and closed at 48.44, up 2.75 (6.02%).

Company officials cited lower than anticipated revenues from the Cablespan product and conservative revenue recognition for the Titan 6500 product as reasons for the weakness.

Management said the company expects $830 million to $865 million in revenue and 0.35 to 0.38 EPS (earnings per share) in the first quarter. For the full year (2001), management now expects revenues to come in between $4.35 billion and $4.4 billion, with earnings in a range of 2.13 to 2.17 a share.

Company officials also noted that weakness in Cablespan sales accounted for half of the quarterly shortfall. Meanwhile, the Titan 6500 product has been well received in the marketplace, according to the company. Revenue recognition on initial shipments was delayed due to lengthy initial acceptance testing during the quarter, said company officials.

In terms of business segments, optical networking is expected to grow between 35 and 40 percent year-over-year in the first quarter. This projection would be above Tellabs’ average of 30 to 35 percent, but below previous expectations. Broadband Access sales are now estimated to increase by 8 to 10 percent in the first quarter, while Next Generation Switching is expected to drop by 25 to 30 percent year-over-year.

In a research note issued March 8, Credit Suisse First Boston analyst James Parmelee left his estimates unchanged, noting that they had been revised downward on February 16. Parmelee maintained his first-quarter EPS estimate at 36 cents on $815 million in revenues, and is keeping an earnings forecast of $2.00 a share on $4.1 billion in sales for the year.

“We continue to believe next-generation product momentum is critical to TLAB outlook," writes Parmalee. He also notes that the Titan 6000 product series should account for 20 percent of growth in the optical networking division for the full year. Parmelee believes that “despite the estimate revisions, management’s guidance remains aggressive within the context of the current service provider spending environment.”

Other analysts followed with cautious comments, but Salomon Smith Barney was the only brokerage house to downgrade Tellabs shares (to Outperform from Buy). UBS Warburg lowered their price target but did not downgrade the stock. W.R. Hambrecht & Co. maintained a Neutral stance, while reducing estimates, and Robertson Stephens lowered estimates and maintained a Long Term Attractive rating. -- Christopher P. Bulkey, special to Light Reading http://www.lightreading.com
mike38 12/4/2012 | 8:44:47 PM
re: Tellabs Warns; Shares Recoup Losses oh my you are too funny ...

don't think so guys ...who ever is starting these grossly untrue rumors should be struck with worthless Zaffire options ... (oops!)

looks like WCOM and GENU are true ...in fact briefing says GENU is a done deal .. WCOM next??

don't worry about Q ..they are tickled pink ...
hype 12/4/2012 | 8:46:58 PM
re: Tellabs Warns; Shares Recoup Losses Hutch (Snarff),

True to your words CSCO, NT, CIEN, Zaffire are in the lab or are in a weird state of deployment (see the 15454). You missed my point and that is, you have to make it through the lab to "Close" and as we know this is the hard part.

Given your hostile attitude are you related to Scott Raynovich?

Keep reading and writing...oh yeah...that smell it's sarcasm...and not corn chips.
hype 12/4/2012 | 8:46:59 PM
re: Tellabs Warns; Shares Recoup Losses Starsky (Qeyton),

Word on the street is...that ONI has been identified as a possible metro solution for WCOM. But as you know with your Monterey "fiasco", they still have to get through the lab.

- H. Bear
Fred Snarff 12/4/2012 | 8:46:59 PM
re: Tellabs Warns; Shares Recoup Losses hype,

being true to your name I see. Along with ONI, Cisco, Zaffire, Nortel, and CIENA have also been identified as possible metro solutions for WCOM. has ONI closed the deal? no. call me when they do and in the mean time try to limit the HYPE.

Fred
generalcharlesdegaulle 12/4/2012 | 8:47:08 PM
re: Tellabs Warns; Shares Recoup Losses well, then the ONUS is on ONIS to show otherwise..
..sorry, just had to say that!
Qeyton 12/4/2012 | 8:47:27 PM
re: Tellabs Warns; Shares Recoup Losses "What have other people heard"

I can tell you that ONI believes they have won Genuity and WCOM. IF that is the case, then its big news
rafaelg 12/4/2012 | 8:47:28 PM
re: Tellabs Warns; Shares Recoup Losses http://www.lightreading.com/do...

hello?
Nortel doesn't have a solution?
Give me a break!!! Some people are blind to anything other than their valued penny stocks...
xzafire 12/4/2012 | 8:47:29 PM
re: Tellabs Warns; Shares Recoup Losses I heard Progress wants OC192 badly and only ONI has the right solution for them. Nortel could not live upto its delivery date, Ciena does not have the right software features. As far as Qwest, ONI has the biggest win ever.

Fred must be some sort of "street" guy with not connections to Nortel, Ciena or Zafire, where i hated in the past ....
allidia 12/4/2012 | 8:47:33 PM
re: Tellabs Warns; Shares Recoup Losses alot changes in 5 months....
drone387 12/4/2012 | 8:47:34 PM
re: Tellabs Warns; Shares Recoup Losses ONI is viewed through two lenses at our place. On one side, it is a competitor. The other side is that ONIS is used as justification for stock valuations when raising money with the VCs or IPOs. A major tank by ONI doesn't necessarily help you in the big picture if you go down in flames with it. Ironbridge's fate got tied to Avici. It looks like Tellium has gotten itself tied to Corvis.
popotoafd 12/4/2012 | 8:47:34 PM
re: Tellabs Warns; Shares Recoup Losses "oni has oc-192 for the metro... (okay maybe is it hiccuping)... but nobody else has it out there.."

Are you sure about that? I distinctly remember Hugh saying that only he and Ciena have the capability when he and representatives of JDSU, Nortel, Ciena and Sycamore participated in a FO round table discussion last year held by Chase and which was webcast. His comment sticks out in my mind as I was surprised to hear that he did not include Nortel, as I assumed Nortel also had the capability....And the head of Nortel optical, Don Smith, was there and did not correct him which I thought was odd given the informal tone of the discussion.... FWIW..

Here is the link to the webcast:

http://www.eventsdigital.com/e...

And here is the segment:

Optical Technology: The Early Innings
Moderator: Jeff Lipton, Senior Analyst, Chase H&Q
Ciena
Steve Chaddick, Senior Vice President,
Systems & Technology
JDS Uniphase
Charles J. Abbe, President and Chief Operating Officer
Nortel Networks
Don Smith, President, Optical Internet Division
ONI Systems Corp.
Hugh Martin, President & Chief Executive Officer
Sycamore Networks
Kevin Oye, Vice President, Business Development
harmon 12/4/2012 | 8:47:35 PM
re: Tellabs Warns; Shares Recoup Losses btw light greedy - can you elaborate on this more... if this the case then i would expect the oni stock to move tomorrow...
Fred Snarff 12/4/2012 | 8:47:35 PM
re: Tellabs Warns; Shares Recoup Losses Light Greedy,

catchy name. yes, I did hear that Qwest was "not-so-impressed" shall we say by ONI. in fact, apparently they sent out a new round of RFI/RFPs to other vendors. not surprised by the OC-192 issues at all. all the marketing folk, journalists, analysts, and other high-level BS artists on this thread will probably have a hard time understanding that though.

if you are part of this group, or were given shares, please spare us the biased, uneducated responses.

Fred
flanker 12/4/2012 | 8:47:35 PM
re: Tellabs Warns; Shares Recoup Losses
I hear Zaffire retained Marvel Comics to do both their advertising and their tech manuals.
NOKIA 12/4/2012 | 8:47:36 PM
re: Tellabs Warns; Shares Recoup Losses hold it fella... don't sell your oni stock just because of what you hear on a stupid message board... oni has oc-192 for the metro... (okay maybe is it hiccuping)... but nobody else has it out there..
192LongHaul 12/4/2012 | 8:47:37 PM
re: Tellabs Warns; Shares Recoup Losses yeah - i know that we've given them negative feedback
birdieking 12/4/2012 | 8:47:38 PM
re: Tellabs Warns; Shares Recoup Losses Terry, why don't you give Zaffire a call....their stuff works and they are great to do business with.
birdieking 12/4/2012 | 8:47:38 PM
re: Tellabs Warns; Shares Recoup Losses Yes you should be worried, ONI has raised expectations in a down market....plus their customer base is not to enthralled by their performance in the field.
harmon 12/4/2012 | 8:47:40 PM
re: Tellabs Warns; Shares Recoup Losses hopefully somebody can substantiate these rumours.. I am betting a lot on what Hugh has been saying... my 401K is already pretty hammered.. should i be concerned?
adithyan 12/4/2012 | 8:47:45 PM
re: Tellabs Warns; Shares Recoup Losses Or is it because QWest is looking at some
of the upcoming metro startups like
Astral point and Alidian ?
harmon 12/4/2012 | 8:47:46 PM
re: Tellabs Warns; Shares Recoup Losses oni is kicking butt. they have revised their earning up tens of millions of dollars for 2001. i doubt they would do this if they were in jeopardy in a key account like qwest... qwest contributes to something like 14% of their revenue
NVestin 12/4/2012 | 8:47:49 PM
re: Tellabs Warns; Shares Recoup Losses Yup - I've heard this in a few places.

That's what burned me up about ONI's last earnings call...they are not telling their investors about these problems.

Hugh Martin needs to come out with the truth.
NOKIA 12/4/2012 | 8:47:49 PM
re: Tellabs Warns; Shares Recoup Losses this is a bunch of crock.. Progress is still very much a customer... if there was any doubt - Hugh Martin would not have pumped this customer win at the earnings meeting and analyst meeting last month...Hugh is a pretty sharp guy... Get a life ONI-hater
Terry Cotter, Warrior 12/4/2012 | 8:47:51 PM
re: Tellabs Warns; Shares Recoup Losses Yep - so you guys are seeing it also, huh?

They gave us this song-and-dance about ease of deployment. We have had an impossible time getting the stuff up and running.

We're not dropping them yet, but are definitely looking around.
Light Greedy (we want ads!) 12/4/2012 | 8:47:52 PM
re: Tellabs Warns; Shares Recoup Losses Did you guys hear that ONI is getting kicked out of Qwest and Progress Telecom?

Qwest - poor CORBA northbound integration, false advertising on ONI's interoperability/integration, modules bringing rings down, a few other things...

Progress - huge problems imlementing OC-192.

What have other people heard?
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