Tellabs Q2 revenue rises sequentially to $288M, but remains cautious about Q3

Tellabs (Nasdaq: TLAB) saw a slight turnaround in its fortunes as Q2 2012 revenues rose 12 percent sequentially to $288 million, up from $259 million in Q1 2012.

However, on a year-over-year basis, revenue was down from $317 million from Q2 2011, a factor related to revenue declines in its four major units: optical, data, access and services.

The Naperville, Ill.-based vendor said that on a GAAP basis, it recorded a net loss of $5 million or 1 cent per share in Q2 2012, compared with a net loss of $29 million, or 8 cents per share, in Q2 2011.

"In the second quarter, Tellabs grew revenue sequentially by 12 percent, generated $32 million in cash from operations, and improved margins and profitability," Dan Kelly, Tellabs acting CEO and president, said in the earnings release. "We won new business and delivered major product releases. While we see a challenging economic and industry environment ahead, our goals are to help customers succeed and to improve Tellabs' profitability."

Here's a breakdown of the company's key segment metrics:

  • Optical: Optical segment revenue was $122.4 million, up 17.2 percent, from $104.4 million in Q1 2012, but down 4 percent from $127.5 million in the same period a year ago. Revenue from its 7100 series optical transport series and the 6300 managed transport systems was more than offset by lower revenue from the Tellabs 5000 digital cross-connect systems. Driven by profits from sales of the Tellabs 7100 optical networking systems and the Tellabs 6300 managed transport systems and lower costs, was $29 million, up 37.4 percent, from $21.1 million.

  • Data: Data revenue was $77.7 million, up 12 percent from $69.4 million in Q1 2012, but down 15.7 percent from $92.2 million in Q2 2011, due to lower revenue from the Tellabs 8600 managed edge systems and the Tellabs 8800 multiservice router series. Data segment profit was $5.4 million, compared with a loss of $15 million.  

  • Access: Access segment revenue was $37.3 million, up 3.9 percent from $35.9 million in Q1 2012, but down 6.3 percent from $39.8 million in second quarter 2011. The company said that an increase in its 1600 single-family Optical Network Terminals (ONTs) was more than offset by lower revenue from its 1000 and 1100 access systems. Driven by lower revenue from the Tellabs 1000 and 1100 access systems, Access segment profit was $6.0 million, down from $8.3 million.

  • Services: Service revenues were $50.7 million, up 5.2 percent from $48.2 million in the first quarter, but declined 11.4 percent, to $57.2 million, from Q2 2011. The services segment revenue decline was due to lower deployment services revenue, including the adjustment for business taxes, and lower revenue from support agreements. Services segment profit, driven primarily by the lower overall level of revenue, was $17.2 million, down from $21.6 million in the same period a year ago.

It's been a challenging time for Tellabs. During Q4 2011, the vendor was forced to lay off 530 employees, while refocusing its efforts on the wireless backhaul and packet optical networking segments.

The vendor's economic issues won't get any easier in Q3 2012. Citing a challenging economic and industry environment in Europe, it has forecast revenues between $260 million and $290 million.

For more:
- see the earnings release (.pdf)

Special Report: Wireline in the second quarter of 2012

Related articles:
Rob Pullen, CEO of Tellabs, passes away
Infonetics: OTN poised for growth, while P-OTS vendors battle for top spot
Tellabs' financial woes continue in Q1 as revenue slides to $258M
Tellabs aligns with NEC Networks, SI to target Japanese packet optical opportunities

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