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

To: Mike who wrote (5415)	4/22/1999 8:10:00 PM
From: Doughboy	Respond to of 7342

Here's Salomon Smith Barney's note (from a week ago) --SUMMARY:--Tellabs, Inc.--Telecommunications Equipment * We continue to recommend Tellabs w/a 1M rating * Post-close TLAB reported better than expected EPS of $0.52 vs our $0.50 estimate & consensus of $0.49 * Upside surprise driven by strong top-line & on target operating margins * Raising our EPS ests and Price target based on better than expected 1Q99 results as well as bullish mgmt comments during its conference call & post conference call discussions * 1999 & 2000 ests raised from $2.48 & $3.10 to $2.55 & $3.20,respectively * Stock price should exceed $135 over the next 12 mos based on TLAB trading at about 40x-45x forward earnings. --EARNINGS:----------------------------------------------------------------- FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 12/98 EPS $0.37A $0.46A $0.49A $0.62A $1.95E Previous 12/99 EPS $0.52A $0.60E $0.60E $0.78E $2.48E Current 12/99 EPS $0.52A $0.60E $0.63E $0.80E $2.55E Previous 12/00 EPS $N/A $N/A $N/A $N/A $3.10E Current 12/00 EPS $N/A $N/A $N/A $N/A $3.20E Previous 12/01 EPS $N/A $N/A $N/A $N/A $N/A Current 12/01 EPS $N/A $N/A $N/A $N/A $N/A Footnotes: EPS are fully diluted. --FUNDAMENTALS:------------------------------------------------------------- Current Rank........:1-M Price 04/14/99......:$112.87 Prior Rank..........: Target Price........:$135.00 P/E 12/99...........:44.3X 52 Wk Price Range...:113.00 - 33.50 P/E 12/00...........:35.3X Proj. 5yr EPS Grth..:25.0% Return on Equity 98.:32.80% BookValue...........:$9.46 LT Debt-to-Capital..:.19% Dividend............:$N/A Revenue 1999........:$2191.90 mil Yield...............:N/A% Shares Outstanding..:199.50 mil Convertible.........:No Mkt. Capitalization.:$22517.57 mil Hedge Clause(s).....: Comments............: --OPINION:------------------------------------------------------------------ We continue to recommend Tellabs with a 1M rating based on our view Tellabs stock price could exceed $135 within the next 12 months assuming Tellabs' multiple could expand to 40x-45x forward earnings of $3.20 in 2000 within the next 12 months. Our optimism is based on our bullish outlook for telecom equipment spending around the world over the next few years. This growth in spending will be driven by an insatiable demand for bandwidth in wireline networks driven by the Internet and data as well as wireless networks because of voice. Tellabs current position in that marketplace and the introduction of new products during the course of the year that should enable Tellabs to solidify its position with major incumbent and next generation carrier such as LECs, IXCs, Cellular, PCS and CLECs. Tellabs' Titan core family of Digital Cross Connects, Martis DXX managed digital networks and echo cancellers as well as recently introduced products such as the AN2100 and the 4500GS combined with new products to be introduced throughout the year should enable Tellabs to fully exploit telecom equipment spending around the world. Post-close yesterday, Tellabs announced better than expected revenue and earnings of $470 million and $0.52 per share, respectively, compared to our forecast of $463.5 million and $0.50 per share. This compares to EPS of $0.37 on revenue of $327.5 million a year ago. Consensus earnings estimates were $0.49 per share. Not only was revenue up 43% year-on-year and earnings up 42% compared to the comparable period a year ago, but the balance sheet showed tremendous improvement. For example, accounts receivable and DSOs both showed a large sequential decline despite the higher sales. Strong earnings plus excellent working capital management enabled the company to generate close to $200 million in additional cash in the quarter. Based on these strong operating results, we are raising our 1999 and 2000 earnings estimates from $2.48 and $3.10 to $2.55 and $3.20, respectively. --------------------------------------------------------------------------