Tellabs profit jumps on network-equipment sales
By Jeffry Bartash, MarketWatch
Last Update: 10:47 AM ET Apr 26, 2006
WASHINGTON (MarketWatch) -- Tellabs Inc. said Wednesday that first-quarter profit and revenue surged as the company continued to benefit from its strategy of acquiring new technology to bolster sales.
Naperville, Ill.-based Tellabs reported net income of $52 million, or 11 cents a share, up from $700,000, or breakeven per share, a year ago. Sales jumped 18% to $515 million from $436 million a year earlier.
Excluding one-time items such as the cost of stock options, the company earned $65 million, or 14 cents a share, compared with income from operations of $26 million, or 6 cents a share, a year ago.
On that basis, Tellabs was expected to earn 12 cents a share on revenue of $494.7 million, according to the consensus of analysts surveyed by Thomson First Call.
"Broad customer demand drove double-digit revenue growth across Tellabs' broadband, transport and services businesses," Chief Executive Krish A. Prabhu said in a statement. "Tellabs continues to build momentum as our customers advance wired and wireless networks to deliver video and broadband services."
Tellabs makes complex devices for the central offices of large phone companies. These "cross connects" collect, sort and transport traffic along communications networks.
The transport segment, which consists of older products, generated $214 million in sales, up 24%, mostly related to higher demand for wireless gear.
Because of slower growth in its older businesses, Tellabs has made several major acquisitions in recent years, broadening its product line and expanding into overseas markets. The company, for instance, now also offers equipment used by phone companies to deliver high-speed Internet service, a fast growing part of the communications business.
The newly constituted "broadband" division reported a 14% increase in revenue to $260 million.
Although Tellabs has succeeded in boosting sales in recent quarters, many analysts speculate that Tellabs might have to find a bigger partner after a wave of consolidation among big phone companies, who in turn have pressured their vendors to do likewise.
The recently announced combination of Lucent Technologies Inc. and France's Alcatel, meanwhile, would create the industry's largest network-equipment vendor and possibly pose stiffer competition to Tellabs.
In recent Wednesday trades, shares of Tellabs (TLABTellabs, Inc.
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Jeffry Bartash is a reporter for MarketWatch in Washington. |
