Tellabs Q3 09: Revenue down, sales to remain flat

With revenue falling 8.2 percent to $389 million and a forecast of flat sales for the fourth quarter, it's likely that Tellabs' leaders are saying to themselves: telecom recovery, what recovery? Indeed. Third quarter revenue at the Naperville, Il.-based telecom vendor fell short of the analyst expectations of $394 million. However, company earnings per share were on track.

Tellabs' CEO Rob Pullen painted a cautiously optimistic picture about the company's growth prospects because many of the company's largest customers are still figuring out what they can and are willing to spend in the next quarter. "I've got customers saying, 'Hey Rob, I have budget money, I'm going to spend,'" Pullen said on the earnings conference call. "I have customers saying, 'I need to spend, but I don't know if I have budget money,' and I have customers saying, 'I think we're going to be cautious in the fourth quarter,' so it's a mix."

Tellabs reported that its broadband division's revenue was $206 million, transport was $128 million, while its services division brought in $55 million during the third quarter.  

One weak area for Tellabs was in its last mile fiber network segment. For the quarter, Tellabs reported slow sales of its fiber network access equipment, a factor that financial analysts reflected slightly lower growth patterns for Verizon's Fiber to the Premises-based FiOS service. During the third quarter, Verizon only added 198,000 FiOS Internet subscribers, a figure that fell short of analyst expectations of 250,000 to 287,000 new subscribers.

"Access was especially weak with $86 million in sales, well below our $99 million forecast, led, we believe, by weaker FiOS net adds reported earlier today at Verizon," said Bank of America Merrill Lynch analyst Tal Liani in a Reuters article.

One potential area of growth for Tellabs might be seen through its acquisition of WiChorus--an acquisition that will give it expanded wireless core capabilities.

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

Related articles
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