Tellabs revenue weak; shares fall
NEW YORK (Reuters) - Network equipment maker Tellabs Inc (TLAB.O) reported weaker-than-expected quarterly revenue and forecast sequentially flat sales for the current quarter, indicating a slow recovery for telecommunications spending, and its shares fell more than 5 percent.
Earnings were in line with expectations, and gross profit margin rose to 41.7 percent from 38.2 percent a year earlier on cost cuts and sales of more profitable equipment.
Third-quarter quarter profit was $29 million, or 7 cents a share, compared with a year-earlier loss of $999 million, or $2.51 a share, that included a $988 million goodwill charge.
Excluding items such as amortization, restructuring and tax charges but including stock-based compensation, earnings were 6 cents a share and matched the average Wall Street forecast, according to Thomson Reuters I/B/E/S.
Quarterly revenue fell 8.2 percent to $389 million from $424 million, compared to the average Wall Street forecast of $394 million.
Tellabs, which supplies gear to phone operators such as AT&T Inc (T.N) and Verizon Communications Inc (VZ.N), forecast fourth-quarter revenue to be flat, plus or minus 3 percent, compared with the previous quarter. Analysts expected $399 million.
The company's shares fell 5.4 percent to $6.30 in premarket trading from Friday's close of $6.66. At Friday's close, they had risen around 35 percent over the past six months on hopes that an economic recovery would encourage phone companies to step up their network investment.
Tellabs announced last Thursday that it planned to buy wireless infrastructure gear manufacturer WiChorus for $165 million to bolster its next-generation wireless technology and take advantage of growing smartphone sales.
Analysts have said the move will help it compete better in the long-term against other equipment makers like Alcatel-Lucent (ALUA.PA) and Cisco Systems Inc (CSCO.O).
The company has said the acquisition would probably dent its profit in 2010, but add to earnings excluding special items from 2011.
(Reporting by Ritsuko Ando; Editing by Derek Caney and Lisa Von Ahn)
