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

To: Boplicity who wrote (2835)	7/30/1998 10:31:00 AM
From: Beltropolis Boy	Respond to of 7342

fwiw, following is today's online investor's "company spotlight." for those you've already put in their due diligence, there's nothing really novel here, but like they say, it's press. ----- Tellabs Inc. Thriving in the Shadows of Telecom July 30, 1998 - Telecommunications is a very hot industry for investors these days, and some of its strongest performers are companies that are not the household names. For all the media attention on companies like AT&T, WorldCom and even Lucent, relatively obscure companies like Tellabs (Nasdaq:TLAB) are quietly cleaning up. Tellabs sells switching equipment that helps telephone companies efficiently manage a wide variety of circuit and traffic types. Its stock price is up 45% since we profiled it in February, and up nearly 8000% since going public in 1990. Tellabs is cashing in on the deregulated frenzy of competition in U.S. telecom, selling high-tech equipment that helps phone companies and other telecommunications service providers upgrade the performance of their networks. Its network transmission and switching products speed voice and data signals across lines, and its echo canceller technology improves call quality. Tellabs also makes products which enable cable operators to transmit voice and data signals over existing cable TV lines. The titans of telecom and cable are pulling out all the stops to stake out turf in the booming communications market, and though it may turn out to be a bloody battle for the competitors, the equipment suppliers like Tellabs can stand by to make a killing from all involved. Tellabs is the leader in digital cross connect systems. Among its customers are six of the seven regional Bells and two of the three Inter-Exchange Carriers (IXCs). In June, Tellabs announced a major deal to acquire CIENA Corp. (Nasdaq:CIEN), the leader in capacity-boosting optical transmission equipment. The combined entities will create an impressive company with a market-leading product lineup and opportunities to greatly leverage the customer base. Tellabs expects slight earnings-per-share dilution in 1998 and no dilution in 1999. Last week Tellabs also received clearance from the antitrust division of the Dept. of Justice to complete its acquisition of Coherent Communications Systems (Nasdaq:CSCC). The Coherent deal, announced in February, has generally won praise from industry analysts. In addition to the cost savings from consolidating operations, Coherent's international focus will complement Tellabs' domestic sales strength, and the two will combine significant expertise in echo cancellation technology for future product development. The stock-swap agreement is expected to be modestly accretive within the first two years. Tellabs' revenues have grown from $258 million in 1992 to $1.2 billion last year. The company had a stated objective of $2 billion in sales by the year 2000, a goal better known around Tellabs as "2B by 2K," but if the CIENA merger closes in the third quarter as anticipated it may reach that mark this year. Analysts are forecasting 36% growth in earnings per share this year and a long-term growth rate of 31%, though many fans of Tellabs believe that rate will be more like 40%. All but one of the 27 analysts covering the stock have a Strong Buy or Buy rating on it. With the stock having rallied so sharply this year, its Price/Earnings ratio is now well above the growth rate. Using 1998 estimates, Tellabs has a P/E of 44.7. But Tellabs has historically traded at a substantial premium to its growth rate in recent years. The company has established itself as a consistent performer, routinely beating analyst estimates by several cents each quarter. It has fat profit margins, with gross margins at 64% in the latest quarter and operating net of 25.5%. High-flying, high-P/E stocks like Tellabs are not for the faint of heart, and there is little margin for error with such lofty growth expectations built into the stock price. At present, though, Tellabs seems well-positioned to reap a windfall of spending on equipment as the telecom titans battle it out in the coming years.