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Technology Stocks : TLAB info? -- Ignore unavailable to you. Want to Upgrade?

To: Brien Koehler who wrote (5989)	9/3/1999 9:33:00 AM
From: A. Edwards	Read Replies (1) \| Respond to of 7342

Armed for a Packetized Future: Salomon Smith Barney research team issued a comprehensive and very bullish 40 pages research report on Tellabs yesterday. However, the stock did not respond positively because of the market concerns over Friday's employment numbers and CSCO's recent acquisition of Cerent. Here is the executive summary of the report on TLAB: Salomon Smith Barney September 2, 1999 Alex M. Cena Karen O. Nielsen T.C. Robillard Jr. We believe that Tellabs will be a major beneficiary of the new telecom infrastructure, not only because it currently participates in two robust markets - SONET-based transmission and SDH managed digital networks - but also because it is successfully pursuing two other high-growth markets - data equipment and optical networking - through internal product development and strategic acquisitions. Titan and Martis products continue to fuel core growth. Accounting for about three-quarters of the company's sales, we believe that the company's Titan and Martis products, which are still in their growth stage, will continue to be major contributors to sales growth over the next several years. We estimate Titan revenue growth of 35% and 30% in 1999 and 2000, respectively, and Martis revenue growth of 13% and 20%. Product line migration to support next generation networks is in place. Through a combination of new product development and acquisitions, Tellabs has successfully developed a migration path for its large and global installed base of customers that want to be able to support and realize the benefits of next generation, packet-based networks. For instance, in addition to acquiring Netcore, which manufactures carrier-class IP routing and ATM switching solutions, it has introduced the AN2100 product. Additionally, the company has announced the TITAN 4500GS, TITAN 6100, and TITAN 6500 as new optical products in addition to the acquisition of Alcatel's European DSC business, which supplies SDH solutions and DWDM technology and which closed at the end of July 1999. The new corporate goal is $6 billion in sales by 2003. It is inevitable at this point that Tellabs will meet its $2 billion in revenue by 2000 goal a full-year ahead of plan. Now that the company is on the heels of achieving this ambitious goal first set a few years ago, the company's management team has now set its sights on $6 billion in revenue by 2003. Based on management's excellent track record on delivering results and meeting or exceeding milestones, we are highly confident the company will reach $6 billion in revenue by 2003. Based on our view that Tellabs can trade at its current valuation range of 40x forward earnings, we believe the company's stock price can approach $88 at the end of 12-18 months.