Tellabs stock down after warning, analysts reassess
--------------------------------------------------------------------------------
CHICAGO, March 8 (Reuters) - Shares in Tellabs Inc.
dipped as much as 6 percent Thursday and several
analysts cut their earnings estimates a day after the
communications equipment maker said an industrywide slowdown in
networking equipment sales would hurt its first quarter
earnings and revenue.
Tellabs' stock fell to $42-7/8 in early Nasdaq trading and
was off 3.15 percent, or $1-7/16, at $44-1/4 late in the
morning. The stock has just slightly exceeded the performance
of the Nasdaq Telecommunications Index over the past year.
The Lisle, Ill.-based company on Wednesday cut its
first-quarter earnings and revenue forecasts due to
lower-than-expected sales in its Cablespan cable telephony
business and its inability to record revenues for some new
products.
Tellabs is the latest communications equipment maker to
slash growth forecasts amid a slowdown in network spending by
telephone companies, Internet service providers and other
customers. Rivals such as Nortel Networks Corp. ,
Cisco Systems Inc. , JDS Uniphase Corp.
and Corning Inc. recently ratcheted down
growth expectations.
Analysts responded on Thursday by cutting their earnings
and revenue estimates, although few changed their ratings on
the company. Among those cutting estimates included Bear
Stearns, Credit Suisse First Boston, Deutsche Banc Alex. Brown,
Lehman Brothers, Morgan Stanley Dean Witter, SG Cowen
Securities, UBS Warburg and WR Hambrecht.
"We are increasingly concerned about the underlying
slowdown in carrier spending activity and a current lack of
visibility in the telecom environment," Deutsche Banc analyst
George Notter said in a research report. He maintained his buy
rating on Tellabs.
Tellabs said on Wednesday it expects first-quarter earnings
per share to be in the range of 35-38 cents, below its prior
guidance of 39 cents a share. Analysts had expected Tellabs to
earn 38 cents, according to First Call/ThomsonFinancial.
Tellabs also cut its sales forecast to a range of $830
million to $865 million, compared with prior guidance of $865
million to $890 million.
The company said growth in its core optical networking
business remains strong, but its Cablespan products, which
allow voice and data services to be transmitted over cable
television networks, have seen "below-trend growth." It expects
sales of its Cablespan products to remain soft for the next few
months.
"For the next two quarters, (customers) are shifting
primarily from building out infrastructure to gaining new
subscribers," Tellabs Chief Executive Dick Notebaert said on a
Wednesday conference call with analysts and investors.
"They have a need to improve their revenues and control
their (cash) burn rate," he added. "I think what we've got here
is short-term pressure for them to improve their current
financial position."
Tellabs also said revenue from shipments of its new Titan
6500 optical switch product will be recognized in the second
quarter rather than the first quarter as previously expected.
Optical switches help connect voice and data traffic to the
proper destination.
For the year, Tellabs expects earnings to be in the range
of $2.13 to $2.17 a share, compared with prior guidance of
$2.17. Analysts had expected $2.14, according to First Call.
Revenues for 2001 will be in the $4.35 billion to $4.4 billion
range, compared with prior guidance of $4.4 billion.
REUTERS
Rtr 14:02 03-08-01 |
