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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
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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..
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.
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
allidia 12/4/2012 | 8:47:33 PM
re: Tellabs Warns; Shares Recoup Losses alot changes in 5 months....
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 ....
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...
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
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