DOW JONES NEWSWIRES
Tellabs Inc.'s (TLAB) second-quarter earnings fell 59% on a
prior-year tax benefit and weak demand for broadband
telecommunications equipment as phone and Internet businesses
remain cautious about spending.
Still, the results beat Wall Street's expectations.
For the third quarter, the company projected revenue will be
flat to up in the mid-single digits on a percentage basis from the
second quarter's $385 million. Analysts surveyed by Thomson Reuters
projected $381 million.
President and Chief Executive Rob Pullen said, "Our business
appears to be stabilizing as customers placed the strongest orders
in more than a year. But it's too soon to predict a recovery."
The global recession is just the latest challenge for the
telecom networking industry, on top of increased competition from
low-cost Asian rivals and weakening leverage as the telecom sector
consolidates.
The supplier of voice, data and video systems has been cutting
costs amid slumping demand for telecommunications equipment and
earlier this month unveiled plans to trim its work force by nearly
5%.
Tellabs reported a second-quarter profit of $16 million, or 4
cents a share, down from $39 million, or 10 cents a share, a year
earlier. Excluding items such as the prior-year tax benefit,
earnings rose to 8 cents from 4 cents.
Revenue decreased 11% to $385 million, as increased revenue from
its data products was more than offset by lower revenue from its
other broadband products, which make up more than half of the
company's sales.
Analysts polled by Thomson Reuters most recently were looking
for earnings of 6 cents on revenue of $381 million.
Gross margin rose to 43.5% from 34.7%.
Revenue dropped 20% in North America, though it rose 7.4%
outside North America. At Tellabs' data business, revenue more than
doubled overall, while it fell 9.2% in the rest of its broadband
business.
Shares closed at $5.77 on Friday and didn't trade premarket. The
stock is up roughly 40% this year, though it's off by nearly half
since two years ago.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com