* Q1 revenue $380 mln vs market view $362 mln
* Q1 EPS ex-items 10 cents vs market view 9 cents
* Q2 revenue view also beats estimates
* Gross margin rises to 50.7 pct from year-ago 44.2 pct
* Shares jump to highest level since Nov 2007
(Adds CEO and analyst's comments, updates share move, byline)
By Ritsuko Ando
NEW YORK, April 27 Tellabs Inc's TLAB.O
results and sales outlook beat expectations as phone companies
bought more network equipment to handle increasing wireless
Internet traffic, sending the stock up more than 10 percent.
Chief Executive Rob Pullen said phone companies were
spending more on their wireless networks, although they were
keeping overall budgets for 2010 unchanged by cutting back on
wireline upgrades. That reflects the popularity of smartphones
and vindicates Tellabs' focus on wireless networks, he said.
"Two years ago we focused on how we're going to help the
mobile backhaul, the mobile Internet. Our strategy is paying
off," he told Reuters in an interview.
Tellabs, a supplier to major U.S. carriers such as AT&T Inc
(T.N), Verizon Communications Inc (VZ.N) and Sprint Nextel Corp
(S.N), said on Tuesday its first-quarter revenue rose 5 percent
to $380 million. That exceeded Wall Street's average forecast
of around $371 million according to Thomson Reuters I/B/E/S.
Tellabs also forecast second-quarter revenue to rise 10
percent to 12 percent sequentially, which would be about $418
million to $426 million -- well above the average analyst
forecast of $388 million.
The increase in mobile Internet use prompted networking
equipment leader Cisco Systems Inc (CSCO.O) to buy Tellabs
competitor Starent Networks for $2.9 billion late last year.
But in a sign that investors saw Tellabs as well positioned
in the wireless networking market, shares of Cisco and other
equipment makers like Juniper Networks Inc (JNPR.N) and
Alcatel-Lucent ALUA.PA fell in early trade, while Tellabs
soared as much as 11.4 percent to $9.16, their highest level on
the Nasdaq since November 2007.
"We believe that Tellabs continues to benefit from ongoing
carrier mobile backhaul investments," J.P. Morgan analyst Rod
Hall said in a note to clients.
Tellabs has also been cutting costs, helping its gross
profit margin rise to 50.7 percent in the quarter from 44.2
percent a year earlier. For the full year, it expects gross
margin to be in the high 40s.
The company reported first-quarter profit of $45.9 million,
or 12 cents a share, up from $6.5 million or 2 cents a share a
Excluding items such as acquisition and restructuring costs
but including stock option charges, profit would have been 10
cents a share, a penny above the average market estimate,
according to Thomson Reuters I/B/E/S.
(Reporting by Ritsuko Ando; Editing by Derek Caney)