Tellabs' Q4 earnings reflect the harsh reality of how conservative service provider spending took its toll on telecom equipment vendors.
During Q4 09, Tellabs reported $389 million in revenue, down from $408 in Q4 08. Annual revenue also declined from $1.7 billion in 2008 to $1.5 billion in 2009. Earnings did not change much from Q3 09 and were slightly below analyst expectations of $391 million.
Going forward, Tellabs has forecasted that Q1 2010 revenues will be $370 million, which is slightly above analyst expectations of $365 million.
There does appear to be some light at the end of the tunnel for Tellabs and other telecom vendors as service providers have publicly said they will begin upgrading their wireline networks to accommodate business services growth and wireless backhaul. Two carriers that have publicly stated new spending in 2020 are AT&T and Windstream. AT&T said it is going to bring more fiber to cell towers in some of its heavily loaded HSPA wireless network markets. Meanwhile, Tier 2 ILEC Windstream yesterday pledged a $20 million investment to expand its fiber network to cell towers and business Ethernet services.
While neither AT&T nor Windstream gave any details on any kind of equipment requirements or awards, Tellabs appears to be responding to these kinds of network upgrade opportunities by shifting its investment focus 'from TDM products to Ethernet and IP (Internet Protocol) products.'
At the same time, cost cutting will be a major issue for Tellabs throughout 2010. Part of that cost cutting mission will include laying off 200 employees over the next five quarters.
For more:
- see the release here (pdf)
- Reuters also has this article
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