Tellabs (Nasdaq: TLAB): Q3 revenue was up, but Q4 outlook disappoints analysts

Tellabs' (Nasdaq: TLAB) Q3 results and Q4 outlook was yet another tale of ups and downs that continue to affect the telecom vendor community.

On the positive side, company revenue rose to $229 million, up from $389 million, up 10 percent from the $389 million it reported in Q3 2009. Quarterly profit rose to $59 million from $28 million in Q3 2009, while earnings per share were 16 cents, beating out analyst estimates polled by Thomson Reuters I/B/E/S of 14 cents.

A big contributor to Tellabs' Q3 earnings increase was a 14 percent jump in international revenue to $132 million.

From a segment perspective, transport and services saw increases were the front runners. Transport revenues were up 33 percent with $170 million in revenue, while services revenue rose 9 percent to $60 million. However, Tellabs did report that its broadband segment, while still earning $199 million in revenue, was down 3 percent from Q3 2009.

Of course, the bigger concern amongst financial analysts was Tellabs' Q4 outlook. Tellabs forecast $410 million to $430 million in Q4 revenue, falling short of Wall Street's expectation of $442 million.

One market that Tellabs' CEO Rob Pullen remains bullish on is the wireless market, where it provides transport equipment for wireless backhaul and mobile core technology.

"Tellabs is generating profitable revenue by enabling customers to power the smart mobile Internet," said Rob Pullen, Tellabs president and chief executive officer in the earnings release. "It's early in the game for mobile Internet, and user demand for smartphones, tablets and mobile data is very strong."

While Tellabs has been traditionally dominated the wireless backhaul market and has been making inroads into the mobile core market with its purchase of WiChorus, rumors that AT&T is shopping for other wireless backhaul sources, could pose potential challenges for the vendor throughout the rest of 2010 and into 2011.  

For more:
- see the earnings release
- Reuters has this article

Related articles:
Tellabs Q2 earnings up, but potential AT&T loss drives down shares
Sizing up the wireline industry in the third quarter 2010
Tellabs maintains status at AT&T
Tellabs' stock down on fear AT&T is switching to Cisco
Tellabs' Q1 revenue boosted by wireless backhaul, professional services

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