<< CHICAGO, Oct 9 (Reuter) - Tellabs Inc said Wednesday that analysts' revised estimates of earnings of $1.80 a share for 1996 and $2.30 a share for 1997 were not unreasonable.
Analysts said the company gave guidance in a conference call to move earnings estimates higher for this year and next.
"That's not unreasonable," Tellabs chief financial officer Peter Guglielmi said in an interview, referring to the revised estimates. "We're not uncomfortable with that."
Before the call estimates centered on $1.64 and $2.11, respectively. The company reported $1.26 a share for 1995.
Shares of Tellabs Inc closed up six at 79.
Late Tuesday, the telecommunications equipment manufacturer reported third quarter earnings of $0.50 a share versus $0.30 last year. Wall Street estimates had centered on $0.40 a share, analysts said.
"Not only did they exceed expectations, it looks like it's sustainable," said Ted Moreau, an analyst for Robert W. Baird & Co, adding he upgraded the stock to a buy rating from a hold. "They're in the right place with the right stuff."
Tellabs said in a release that the growth in earnings was driven primarily by its TITAN and Martis digital cross-connect systems. The systems are used for high-speed data services such as Internet access.
"Third-quarter TITAN 5500 and Martis DXX system sales doubled last year's third quarter levels, bolstered by the effects of deregulation and competition in the United States and our continued expansion into newly developing global markets," Tellabs president Michael Birck said.
Joe Noel, an analyst for Hambrecht & Quist, said he upgraded Tellabs to a strong buy from a buy and expects the stock to hit 95 over the next six months.
Noel said Tellabs indicated its gross margin was about 59 percent and could reach 60 percent. He said most analysts had models with long-term gross margins of about 57.
"In order to deploy high-speed data services if you're a telecommunications company, you almost have to buy Tellabs," Noel said. "And the demand for high-speed date services continues to grow.">>
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