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

To: llwk7051@aol.com who wrote (5517)	5/6/1999 9:11:00 AM
From: Sueponine	Read Replies (1) \| Respond to of 7342

All, From SSB Research dated yesterday. 05/05/99 Tellabs, Inc. (TLAB $115.37,1-M,Tgt $145.00) Alex M. Cena --SUMMARY:--Tellabs, Inc.--Telecommunications Equipment * We continue to recommend TLAB with a 1M rating * In fact, raising our EPS estimates and 12-month price targets * 1999 & 2000 EPS raised from $2.55 & $3.20 to $2.57 & $3.25, respectively. * Stock could exceed $145 within 12mos assuming it could trade at 45x forward EPS * Confidence in higher ests based on upbeat meeting analyst meeting TLAB just held yesterday near its corporate HQ in Lisle, IL. * Mgmt provided: 1) specifics on new products launched & to be launched; 2) source of increased & continued demand for existing products; 3) showcased a deep mgmt team; 4) eased concerns that it would rush 05/05/99 Tellabs, Inc. (TLAB $115.37,1-M,Tgt $145.00) Alex M. Cena into a large acquisition. --OPINION:------------------------------------------------------------------ We continue to recommend TLAB with a 1M rating. In fact, raising both our near term and long-term revenue and earnings estimates as well as our 12-month price targets. We now believe 1999 and 2000 earnings could exceed $2.57 & $3.25, respectively, on revenue of $2.201 billion and $2.840 billion. This compares to our previous forecasts of $2.55 and $3.20 on revenue of $2.192 billion and $2.795 billion. Our previous price target was based on our opinion that Tellabs could trade somewhere between 40x-45x forward EPS. We now believe Tellabs could trade at the upper end of the valuation range on higher estimates, indicating Tellab's stock price could exceed $145 within the next 12 months. Our upward earnings revisions as well as our increased confidence in the company's ability to execute its straegic vision was driven by an upbeat meeting analyst meeting Tellabs just held yesterday near its corporate HQ in Lisle, IL where the company's senior officers provided: 1) specifics on new products launched & to be launched; 2) source of increased & continued demand for existing products; 3) showcased a deep management team; and, 4) eased concerns that it would rush into a large acquisition. Specifics on New Products and Products to Be Launched: Tellabs over the last several months has announced a number of new products, including feature package 6.0 for the Titan 5500, the AN2100, the 4500GS and just 2 days ago the T6100, while its next generation broadband transport manager the BTM should be entering trials in the fall for commercial launch in the early part of next year. Tellabs management not only provided a roll out schedule, but also more importantly provided details on how customers will use the technologies, why customers will purchase the products from Tellabs and how the new products compliment the exisitng businesses. Source of Increasd & Continued Demand for Exisiting Products: The Titan 5500 continues to grow at a faster rate than anyone had expected, while Martiss continues to generate on target returns. The accelleration in demand driven by incumbent carriers that are under pressure to grow their networks due to both increased demand for services as well as competitive pressures, while emerging carriers are still in the deployment phase. Also, management highlighted that the installed base of Titan 5500s that are not fully configured represents an $8-$10 billion opportunity even if Tellabs were not able to sell another single unit. Analyst meeting showcased a very deep management team: One of the reasons the Tellabs story has been consistent has been a combination of successful execution as well as the fact that the story has been told by the same top three officers of the company. While this obviously also delivers a consistent message, but questions about the company's succession strategy has started to rise to the surface since there already has been some speculation that this could occur over the next 2-5 years. We believe yesterday's analyst meeting certainly alleviated many of those fears since the company showcased many of the very capable officers in the company. Management alleviated concerns that it may rush into a large acquisition. Management highlighted that first and foremost an acquisition must be able to deliver new technology and markets to Tellabs by either filling exisiting gaps in the company's product lines or complimenting the exising prodct lines. However above all, the company to be acquired "must fit with Tellabs culture." That statement alone, we believe, suggests Tellabs is not about to acquire some of the companies that have been under speculation. In our opinion, Tellabs would likely acquire some private companies since there are few if any public companies left. While not part of formal venue, private hallway discussions with management also indicate greater sense of optimism about the near-term and long-term outlook. +++++++ Later. Sueponine.