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

To: Brien Koehler who wrote (6980)	7/19/2000 6:41:33 PM
From: Brien Koehler	Read Replies (1) \| Respond to of 7342

Morningstar.com: Tellabs Is Getting Back on Track By Jay Ritter After the company reported solid second-quarter earnings and positive developments on the new-product front, shares of Tellabs (Nasdaq: TLAB - news) look attractive. The company has been slowly working its way back into investor's good graces since announcing a rare--for Tellabs--earnings miss in the first quarter. The company turned in second-quarter earnings of $0.39 per share, up 39% and $0.02 better than consensus views. Revenues grew 48% to $801 million, a significant pickup from the first quarter. The solid results were driven by booming demand for the company's flagship digital cross connects from regional Bell operating companies and other service providers scrambling to keep up with surging Internet traffic. Profit margins declined from the year-ago period but increased substantially from the first quarter. And although manufacturing glitches and parts shortages have yet to disappear, the company is making progress in coping with the situation. Another bright spot in the quarter was growth from Tellabs' Cablespan product. Cablespan allows cable operators to offer phone calls and Internet-data service over standard coaxial cable, and it is seeing strong acceptance in the United States and in Europe. Revenues from it are expected to more than triple this year. Investors have questioned the company's ability to find enough revenue sources to replace its highly successful line of digital cross connects as that product matures. While these concerns have not gone away, it appears as if Tellabs is within a quarter or two of generating significant sales on several promising new products, including its next-generation cross connect, which is in field trials at Sprint (NYSE: FON - news). Tellabs is also making a long-awaited foray into the hot optical-networking arena. With an initial product for the metropolitan-area networking market and an optical cross connect being developed for release next year, the company is not resting on its laurels. Although Tellabs' stock isn't nearly as cheap as it was three months ago, its valuation seems reasonable compared with most of its peers', at about 35 forward earnings, or a little more than one times its expected long-term growth rate. Given its sterling reputation and improving outlook, the stock looks like a solid bet for long-term investors.