Tellabs achieves $424 million in third-quarter revenue
Company repositions for future through restructuring and focus on target solutions
Naperville - Tellabs’ third-quarter 2008 revenue totaled $424 million, down 7% from $458 million in the third quarter of 2007. Revenue from outside North America rose 21% from the year-ago quarter to $160 million.
On a GAAP (U.S. generally accepted accounting principles) basis, Tellabs recorded a loss of $999 million or $2.51 per share in the third quarter of 2008, including:
• a non-cash goodwill impairment charge of $988 million,
• restructuring charges for plans announced in previous quarters of $9 million,
• other charges totalling $11 million, and
• a non-cash tax charge of $6 million for the establishment of a valuation allowance against domestic deferred tax assets.
In the third quarter of 2008, in accordance with the provisions of SFAS 142, Goodwill and Other Intangible Assets, we performed an analysis to determine whether or not our goodwill was impaired. The non-cash goodwill impairment charge represents a complete write-off of goodwill associated with Tellabs Broadband and Transport segments. It has no effect on Tellabs’ cash, cash equivalents and marketable securities of $1.2 billion. In the third quarter of 2007, Tellabs earned $4 million or 1 cent per share on a GAAP basis.
On a non-GAAP basis, Tellabs earned $19 million or 5 cents per share in the third quarter of 2008, up 32% from $14 million or 3 cents per share in the year-ago quarter. Non-GAAP results exclude a non-cash goodwill impairment charge of $988 million; restructuring charges of $9 million; equity-based compensation expense of $5 million or 1.0 cents per share; and other charges of $6 million.
In the third quarter of 2008, GAAP and non-GAAP gross profit margins were 38% and 39%, respectively. In the second quarter of 2008, GAAP and non-GAAP gross profit margins were 35%.
“Tellabs successfully executed in the third quarter, achieving record data and IP networking revenue, strong revenue outside North America and higher gross profit margins. Unfortunately, we need to further reduce our workforce and write down goodwill,” said Rob Pullen, Tellabs president and chief executive officer. “Going forward, we are focusing future investments in our target solutions ¯ mobile backhaul, optical networking and business services. We are also increasing investment in our sales channels.”
Broadband — Third-quarter 2008 revenue from the broadband segment totaled $260 million, down 7% from $279 million in the third quarter of 2007. Within the broadband segment:
• Data networking revenue reached a record $68 million, up 19% from $57 million in the year-ago quarter.
• Access revenue was $113 million, down 28% from $157 million in the year-ago quarter.
• Managed access revenue was $79 million, up 20% from $65 million in the year-ago quarter.
Transport — Third-quarter 2008 transport revenue totaled $109 million, down 11% from $123 million in the year-ago quarter.
Services — Third-quarter 2008 services revenue was $55 million, compared with $56 million in the year-ago quarter.
Fourth-Quarter 2008 Guidance — The following statements are forward-looking statements that are based on current expectations and involve risks and uncertainties, some of which are set forth below. Tellabs does not expect to see the normal fourth-quarter seasonality; we expect fourth-quarter 2008 revenue to be flat to down from the third quarter of 2008, in a range from $424 million to the low $400 millions. Non-GAAP gross margin is expected to be up slightly, plus or minus 2%, from the third quarter of 2008, depending on product and customer mix. Non-GAAP operating expenses are expected to continue on a downward trajectory. Non-GAAP gross margin excludes about $1 million in equity-based compensation expense. Non-GAAP operating expense excludes about $4 million in equity-based compensation expense.
Simultaneous Webcast and Teleconference Replay — Tellabs will host an investor teleconference at 7:30 a.m. Central Daylight Time today to discuss its third-quarter 2008 results and provide its outlook for the fourth quarter of 2008. Internet users can hear a simultaneous webcast of the teleconference at www.tellabs.com; click on the webcast icon. A taped replay of the call will be available beginning at approximately 10:30 a.m. Central Daylight Time today, until midnight Central Daylight Time on Thursday, October 23, at 800-642-1687. (Outside the United States, call 706-645-9291.) When prompted, enter the Tellabs conference ID number: 67120824. A podcast of the call will be available at www.tellabs.com/news/feeds/ later today.
Tellabs Investor Conference — Tellabs is hosting an investor conference on Thursday, Nov. 13, 2008, from 9:30 a.m. until 2:30 p.m. Central Standard Time. The event will combine presentations with Q&A sessions.
Interested investors can access a live video and audio webcast of the presentation at www.tellabs.com. An on-demand replay of the webcast will be available starting 24 hours after the presentation and will be archived for 30 days.
Tellabs advances telecommunications networks to meet the evolving needs of users. Solutions from Tellabs enable service providers to deliver high-quality voice, video and data services over wireline and wireless networks around the world. Tellabs (NASDAQ: TLAB) is part of the NASDAQ Global Select Market, Ocean Tomo 300™ Patent Index and the S&P 500. www.tellabs.com
Forward-Looking Statements — This news release, which includes the results of operations discussion that follows, contains forward-looking statements, including but not limited to the guidance information contained in this release that involve risks and uncertainties. Actual results may differ from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, risks associated with: the competitive landscape, including pricing and margin pressures, the response of customers and competitors, industry consolidation, the introduction of new products, the entrance into new markets, the ability to secure necessary resources, the ability to realize anticipated savings under our cost-reduction initiatives, and overall negative economic conditions and disruptions in credit and capital markets, including specific impacts of these conditions on the telecommunications industry. The company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after today or to reflect the occurrence of unanticipated events. For a more detailed description of the risk factors, please refer to the company’s SEC filings.
The complete text of this release is available at www.tellabs.com/...
Tellabs® and ® are trademarks of Tellabs or its affiliates in the United States and/or other countries. Any other company or product names mentioned herein may be trademarks of their respective companies.
Company repositions for future through restructuring and focus on target solutions
Naperville - Tellabs’ third-quarter 2008 revenue totaled $424 million, down 7% from $458 million in the third quarter of 2007. Revenue from outside North America rose 21% from the year-ago quarter to $160 million.
On a GAAP (U.S. generally accepted accounting principles) basis, Tellabs recorded a loss of $999 million or $2.51 per share in the third quarter of 2008, including:
• a non-cash goodwill impairment charge of $988 million,
• restructuring charges for plans announced in previous quarters of $9 million,
• other charges totalling $11 million, and
• a non-cash tax charge of $6 million for the establishment of a valuation allowance against domestic deferred tax assets.
In the third quarter of 2008, in accordance with the provisions of SFAS 142, Goodwill and Other Intangible Assets, we performed an analysis to determine whether or not our goodwill was impaired. The non-cash goodwill impairment charge represents a complete write-off of goodwill associated with Tellabs Broadband and Transport segments. It has no effect on Tellabs’ cash, cash equivalents and marketable securities of $1.2 billion. In the third quarter of 2007, Tellabs earned $4 million or 1 cent per share on a GAAP basis.
On a non-GAAP basis, Tellabs earned $19 million or 5 cents per share in the third quarter of 2008, up 32% from $14 million or 3 cents per share in the year-ago quarter. Non-GAAP results exclude a non-cash goodwill impairment charge of $988 million; restructuring charges of $9 million; equity-based compensation expense of $5 million or 1.0 cents per share; and other charges of $6 million.
In the third quarter of 2008, GAAP and non-GAAP gross profit margins were 38% and 39%, respectively. In the second quarter of 2008, GAAP and non-GAAP gross profit margins were 35%.
“Tellabs successfully executed in the third quarter, achieving record data and IP networking revenue, strong revenue outside North America and higher gross profit margins. Unfortunately, we need to further reduce our workforce and write down goodwill,” said Rob Pullen, Tellabs president and chief executive officer. “Going forward, we are focusing future investments in our target solutions ¯ mobile backhaul, optical networking and business services. We are also increasing investment in our sales channels.”
Broadband — Third-quarter 2008 revenue from the broadband segment totaled $260 million, down 7% from $279 million in the third quarter of 2007. Within the broadband segment:
• Data networking revenue reached a record $68 million, up 19% from $57 million in the year-ago quarter.
• Access revenue was $113 million, down 28% from $157 million in the year-ago quarter.
• Managed access revenue was $79 million, up 20% from $65 million in the year-ago quarter.
Transport — Third-quarter 2008 transport revenue totaled $109 million, down 11% from $123 million in the year-ago quarter.
Services — Third-quarter 2008 services revenue was $55 million, compared with $56 million in the year-ago quarter.
Fourth-Quarter 2008 Guidance — The following statements are forward-looking statements that are based on current expectations and involve risks and uncertainties, some of which are set forth below. Tellabs does not expect to see the normal fourth-quarter seasonality; we expect fourth-quarter 2008 revenue to be flat to down from the third quarter of 2008, in a range from $424 million to the low $400 millions. Non-GAAP gross margin is expected to be up slightly, plus or minus 2%, from the third quarter of 2008, depending on product and customer mix. Non-GAAP operating expenses are expected to continue on a downward trajectory. Non-GAAP gross margin excludes about $1 million in equity-based compensation expense. Non-GAAP operating expense excludes about $4 million in equity-based compensation expense.
Simultaneous Webcast and Teleconference Replay — Tellabs will host an investor teleconference at 7:30 a.m. Central Daylight Time today to discuss its third-quarter 2008 results and provide its outlook for the fourth quarter of 2008. Internet users can hear a simultaneous webcast of the teleconference at www.tellabs.com; click on the webcast icon. A taped replay of the call will be available beginning at approximately 10:30 a.m. Central Daylight Time today, until midnight Central Daylight Time on Thursday, October 23, at 800-642-1687. (Outside the United States, call 706-645-9291.) When prompted, enter the Tellabs conference ID number: 67120824. A podcast of the call will be available at www.tellabs.com/news/feeds/ later today.
Tellabs Investor Conference — Tellabs is hosting an investor conference on Thursday, Nov. 13, 2008, from 9:30 a.m. until 2:30 p.m. Central Standard Time. The event will combine presentations with Q&A sessions.
Interested investors can access a live video and audio webcast of the presentation at www.tellabs.com. An on-demand replay of the webcast will be available starting 24 hours after the presentation and will be archived for 30 days.
Tellabs advances telecommunications networks to meet the evolving needs of users. Solutions from Tellabs enable service providers to deliver high-quality voice, video and data services over wireline and wireless networks around the world. Tellabs (NASDAQ: TLAB) is part of the NASDAQ Global Select Market, Ocean Tomo 300™ Patent Index and the S&P 500. www.tellabs.com
Forward-Looking Statements — This news release, which includes the results of operations discussion that follows, contains forward-looking statements, including but not limited to the guidance information contained in this release that involve risks and uncertainties. Actual results may differ from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, risks associated with: the competitive landscape, including pricing and margin pressures, the response of customers and competitors, industry consolidation, the introduction of new products, the entrance into new markets, the ability to secure necessary resources, the ability to realize anticipated savings under our cost-reduction initiatives, and overall negative economic conditions and disruptions in credit and capital markets, including specific impacts of these conditions on the telecommunications industry. The company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after today or to reflect the occurrence of unanticipated events. For a more detailed description of the risk factors, please refer to the company’s SEC filings.
The complete text of this release is available at www.tellabs.com/...
Tellabs® and ® are trademarks of Tellabs or its affiliates in the United States and/or other countries. Any other company or product names mentioned herein may be trademarks of their respective companies.
