TLAB ($11-14 12) PE 26 Cap = $5bil.....posts 3rd qtr loss after charges
siliconinvestor.com
By Ben Klayman
CHICAGO, Oct 16 (Reuters) - Telecommunications equipment maker Tellabs Inc. (NasdaqNM:TLAB - news) on Tuesday said its third-quarter results plunged to a loss with revenues down almost half as the company slashed expenses and cut jobs, but gave investors hope the telecom sector is stabilizing.
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The Lisle, Illinois-based company's results, including one-time charges of more than $60 million, fell to a loss of $49.47 million, or 12 cents a diluted share, compared with a profit of $187.3 million, or 45 cents a share, last year.
Officials pointed to stability in orders, but nevertheless declined to provide any guidance for the fourth quarter, citing an inability to predict business.
"When I talk about the stability that does not imply predictability, President and Chief Executive Richard Notebaert told analysts on a conference call.
He added, however, that revenues could remain in the range of the third quarter's $448.2 million, down from $812.1 million last year, for the next few quarters.
Merrill Lynch analyst Michael Ching said he cut his fourth-quarter and 2002 earnings estimates each by 60 percent, to 2 cents per share for the quarter and 18 cents for the full year.
Analysts had been expecting the company to earn 5 cents a share in the fourth quarter, with a range of nil to a profit of 10 cents, according to Thomson Financial/First Call.
Chief Financial Officer Joan Ryan said Tellabs has targeted hitting 15-percent growth in revenues and earnings by the end of 2003 and beyond.
Tellabs shares closed unchanged at $12.97 in Tuesday Nasdaq trading. Since the beginning of the year, the stock has plunged about 77 percent and underperformed its peers in Standard & Poor's Communications Equipment index (^SPCOMM - news) by more than 30 percent.
Notebaert said more than 10 percent of third-quarter sales were generated by new products, including its Titan 6000 series of optical switches that help connect voice and data traffic to the proper destination.
``Some people were expecting more disappointment,'' J.P. Morgan H&Q analyst Jeffrey Lipton said. "Their tone from the (conference) call is that things are at least stabilizing.
``My issue is that the uptake for the new products, the 6000 series, still appears to remain slow,'' he added.
One-time items in the quarter included a $50 million restructuring charge announced in August, a gain of $6 million from the sale of stock, and a write-down of $19 million in technology investments.
Merrill Lynch's Ching credited the company for managing its operating expenses -- which fell 13 percent from the second quarter -- but said many analysts were looking for sales in the range of $475 million.
``Sales were a bit disappointing and not having an outlook is also very, very frustrating,'' he said.
Ryan said the company's July objective of a 5-percent cut in operating expenses was achieved a quarter early, and Tellabs would continue trying to reduce costs further.
Excluding charges, Tellabs's earnings fell to $2.4 million, or 1 cent a diluted share, from $196.26 million, or 47 cents a share, last year. Analysts had expected it to earn 1 cent a share, with a range of a loss of 3 cents to a profit of 4 cents, according to First Call.
The company warned in July it saw challenging conditions over the upcoming quarters in the telecom industry, but also did not provide detailed guidance then.
In August, Tellabs said it would cut 12 percent of its work force, or 1,000 jobs, close two facilities and take the third-quarter charge as it moved to slash expenses.
The gloom among telecom industry companies has spread as curtailed customer spending has forced negative revisions in earnings forecasts and job cuts to match the lower revenues.
Such prominent names as Lucent Technologies Inc. (NYSE:LU - news),Corning Inc. (NYSE:GLW - news) and Nortel Networks Corp. (NYSE:NT - news) (Toronto:NT.TO - news) have been hurt by the drastic slowdown in spending.
Tellabs said its optical networking business saw sales increase 5 percent from the second quarter to $233 million, while those of the Titan 6000 switches rose to $47 million. Its broadband access segment sales fell $25 million from the second quarter to $122 million because of the weaker European market.
The company said its accounts receivables and inventories both fell from the second quarter, while its cash on hand remained stable at more than $1 billion. |
