UPDATE 3-Tellabs second-quarter earnings fall
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(Recasts first paragraph, adds company comments, background
throughout, byline, changes dateline, previous Lisle, Ill.)
By Ben Klayman
CHICAGO, July 18 (Reuters) - Telecommunications equipment
maker Tellabs Inc. on Wednesday said second-quarter
operating earnings fell dramatically as the economic slowdown
continued to leave its mark, and the company failed to provide
any outlook for the near future, citing the uncertain market.
The Lisle, Illinois-based company said earnings for the
quarter declined to $10 million or 2 cents a share from $163
million or 39 cents a share in the same period last year.
After the company revised its forecast last month, analysts
had expected a break-even quarter, according to Thomson
Financial/First Call.
Including a $262 million restructuring charge, the company
lost $174 million, or 43 cents a share, compared with a gain of
$157.1 million, or 38 cents a diluted share, last year.
"It's safe to say that Tellabs, like just about every other
supplier of telecom equipment, has just finished two
challenging quarters," Tellabs President and Chief Executive
Richard Notebaert said on a conference call with analysts.
"The first half of 2001 will be remembered by all of us as
the beginning of a fundamental rationalization of the entire
telecom industry and all indications are we have several more
challenging quarters ahead," he added.
NO GUIDANCE
However, Tellabs did not provide guidance for the third
quarter or full year, something analysts had wanted.
Before Wednesday's earnings release, analysts had expected
Tellabs to earn 3 cents a share in the third quarter and 42
cents a share for the entire year, according to First Call.
"The second quarter was pretty much a washout quarter,"
Merrill Lynch analyst Michael Ching said. "They did a little
bit better than they suggested a couple of weeks ago, but
what's more important is the outlook going forward."
Notebaert said it was simply a matter of not knowing what
will happen in the near future.
"Our customers' visibility is suspect...so we're a little
hesitant to put a number out there," he said.
Chief Financial officer Joan Ryan said the industry
slowdown in North America has been somewhat balanced by the
relatively stable performance outside the United States.
Business outside North America represented about 32 percent of
revenues in the second quarter, up from 22 percent in the
previous quarter.
Tellabs last month slashed its second-quarter outlook
because of reduced customer spending on telecommunications
equipment. It said it expected to break even before the
restructuring charge and report sales of about $500 million,
down from previous guidance of $780 million to $820 million.
Net sales actually fell 35 percent to $509.4 million from
$785.5 million last year.
SHARES RISE IN EARLY TRADE
Tellabs shares were up 10 cents at $16.34 in Wednesday
morning trading on the Nasdaq. Over the past year they have
outperformed the Standard & Poor's Communications Equipment
index by almost 14 percent.
The slowdown has hurt almost all telecommunications
equipment makers, leading them to forecast reductions and job
cuts. Industry giant Nortel Networks Corp. in
June predicted a massive $19.2 billion second-quarter loss and
said it would cut another 10,000 jobs.
Tellabs said in May it expected to take restructuring
charges of $262 million, larger than previously anticipated. In
mid-April it estimated restructuring charges at $150 million to
$225 million, related to exiting its SALIX switching business,
plant consolidation, and employee-related, fixed-asset and
inventory-related charges.
Tellabs said cash on hand at the end of the second quarter
rose slightly to just over $1 billion, while accounts
receivables and inventories dropped 31 percent and 11 percent
respectively.
Sales in Tellabs' optical networking business declined 58
percent from last year's second quarter to $221 million, while
broadband access product sales fell 6 percent to $148 million.
Sales in the voice-quality enhancement business were
practically flat at $45 million, and revenues in the solutions
and services unit rose 48 percent to $102 million.
Notebaert said Tellabs booked its first revenues for its
Titan 6000 series optical switches, which help connect voice
and data traffic to the proper destination.
The company also said it cut operating expenses by $19
million in the second quarter to $224 million.
REUTERS
Rtr 12:55 07-18-01 |
