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Tellabs Reports Revenue Hit for First Quarter 2009

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April 28, 2009

Tellabs Reports Revenue Hit for First Quarter 2009

By Tim Gray, TMCnet Web Editor

Telecommunications network provider Tellabs' (News - Alert) first quarter revenues dropped more than $100 million in 2009 compared to the previous year on the backs of a shaky global economy and an overall organizational plan designed to reduce costs and expenses, the company announced today during an earnings call.

The Illinois-based company reported revenues totaling $362 million, compared with $464 million in the first quarter of 2008, while earning $7 million, or 2 cents per share, on a GAAP basis. A year ago the company earned $17 million, or 4 cents per share.
On the upside, at the same time GAAP gross profit margins were 44.2 percent in the first quarter of 2009, higher than in any quarter since the third quarter of 2006. The company generated $44 million in cash from operations and increased its cash and cash equivalents to $1.18 billion.
Tellabs CEO Robert Pullen said the company would continue to invest in the future through increasing research and development spending that amounted to 19 percent of revenue in the quarter.
In December, Pullen told TMCnet that 2008, his first year as CEO, had been a challenging one and he had set the company on a path to reduce costs and expenses that could affect earnings numbers in the short term.
“Tellabs made good progress during my first year as CEO,” said Pullen. “We improved our profitability by making some tough decisions, such as discontinuing an unprofitable product developed for a single customer, and completing a $100 million plan to reduce our costs and expenses.”
These cost saving moves did yield positive results as Tellabs gained new customers for their growth products, including dynamic optical networking and data products. “Data products continue to be our fastest-growing product category: first quarter data revenue grew 45 percent compared with the year-ago quarter,” said Pullen.
“We are successfully transitioning to growth products while improving gross profit margins, generating cash and investing in the future," said Pullen.
According to Pullen, from a non-GAAP basis, Tellabs earned $22 million or 6 cents per share, compared with $32 million or 8 cents per share in the year-ago quarter. The non-GAAP results exclude pretax charges of $18 million, which includes $5 million or 0.9 cents per share in equity-based compensation expense.
"Tellabs continues to focus on improving profitability - both our customers' and our own - by helping customers generate new revenues, reduce capital expenses and cut operating expenses," said Pullen.
For the first quarter of 2009, broadband segment revenue was $178 million, transport segment revenue was $130 million and services segment revenue was $54 million.
As TMCnet reported, Tellabs recently partnered with supply chain specialist KGP Logistics in an effort to increase solution availability to IOCs in North America.

The move was designed to expand key partnerships to provide increased broadband services to unserved and underserved broadband customers.

Tim Gray is a Web Editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Tim’s articles, please visit his columnist page.

Edited by Tim Gray

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