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Technology Stocks : TLAB info?
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To: mopgcw who wrote (7325)5/22/2003 12:02:27 AM
From: mopgcw  Read Replies (1) of 7342
 
GS: Tellabs, Inc. EPS (FY Dec) 2003E (US$0.28), 2004E (US$0.02) In-Line/Neutral
(TLAB) US$7.03
The announced acquisition of Vivace Networks highlights Tellabs' effort to improve
its longer-term growth rate as it enters new markets that offer significant revenue
potential. However, we are not making any changes to CY03 or CY04 EPS or
revenue estimates at this time. We are currently estimating that Vivace will be able
to contribute about $60 million to Tellabs' overall top-line in CY04. We are also
estimating margins in CY04 for this product to be about 50% and affiliated operating
expenses to be about $40 million. At yesterday's closing price of $7.18, shares of
Tellabs are trading 16-18x normalized 2004 EPS, and we believe this already reflects
the assumed successful execution of this deal. Further, the company is trading at
about 2.0-21x firm-value-to-sales, which is higher than its traditional range of
1.4-1.7x. We continue to believe that shares of Tellabs are fairly valued in the
$5.50-$6.50 range in the near-term.
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