) reported fourth-quarter 2012 adjusted (excluding special items)
earnings per share of one cent, beating the Zacks Consensus
Estimate of a negative 2 cents. On a GAAP basis, net loss in the
fourth quarter was $23 million or a loss of 6 cents per share
wider than a net loss of $5 million or 1 cent per share in the
Quarterly total revenue of $242.2 million was down 30.9% year
over year, and also below the Zacks Consensus Estimate of $250.0
million. All the four reporting segments of Tellabs witnessed
declines in annualized sales.
During 2012, the company reported total revenue of $1,052.6
million compared with $1,285.7 million in 2011. Adjusted
(excluding special items) earnings per share stood at $1 million
in 2012 as compared to a net loss of $8 million in 2011.
4Q Segment Details
The Optical segment revenue stood at $97.2 million, down 14.2%
year over year. The decline was primarily driven by significantly
lower sales from the Tellabs 5000 digital cross-connects systems,
Tellabs 6300 managed transport systems and Tellabs 7100 optical
transport systems. Optical segment profit was $22.3 million
compared with $26.2 million in the year-ago quarter. The decline
in segment profit was attributable to lower overall revenue.
Total revenue generated by the Data segment was $52.2 million,
down 48.4% year over year, hamstrung by lower sales of the
Tellabs 8100 managed edge systems and the Tellabs 8800 and 8600
multiservice router series. The segment generated a loss of $8.6
million, compared to a profit of $1.2 million in the prior-year
quarter. Segmental loss resulted from lower overall revenue and
lower gross margin.
Total revenue of the Access segment was $41.0 million, down 5.3%
year over year. The decline in revenue was attributable to
lower revenue from Tellabs 1600 single family Optical Network
Terminals (ONTs) partially offset by increased revenue from
Tellabs 1000 and 1100 access systems. The segment's profit surged
to $8.4 million, from $7.5 million recorded in the prior-year
quarter, buoyed by better product gross margins.
Total revenue of the Service segment was $51.8 million, down
12.2% year over year, hurt by lower revenues generated from the
deployment services and support systems. The segment profit rose
to $22.0 million, from $20.9 million in the prior-year quarter,
mainly due to improved service gross margins.
Other Highlights of the Release
Quarterly Non-GAAP gross margin was 42.2% compared with 39.4% in
the year-ago quarter. Non GAAP Operating expenses, in the
reported quarter, were $99.4 million compared with $96.6 million
in the prior-year quarter.
During 2012, Tellabs generated $45.1 million in cash from
operations against a consumption of $49.1 million in cash from
operations during 2011. Free cash flow, during 2012 was $13.7
million compared with a negative $114.3 million during 2011.
Tellabs exited the quarter with $604.4 million of cash and
marketable securities on its balance sheet compared with $976.6
million at the end of 2011.
In the fourth quarter of 2012, North American region generated
$132.1 million (55% of total revenue) in revenue compared with
$146.1 million recorded in the prior-year quarter. The rest of
the world generated the remaining $110.1 million (45% of total
revenue) in revenue compared with $170.7 million recorded in the
Management expects the company's first-quarter 2013 revenue to be
in the range of $205 million to $220 million. Non-GAAP gross
margin is expected to be 34%, plus or minus 1 or 2 percentage
points, based on product mix. Non-GAAP operating expenses are
expected to be flat or down compared with fourth quarter of 2012,
while non-GAAP tax rate is expected to be around 32% for the
Financial Release of Related Company
One other stock to consider in this industry is
). Juniper's net earnings of 17 cents managed to beat the Zacks
Consensus Estimate of 15 cents in the most recent quarter.
Other Stock Set for Earning Releases
Another related stock
) is about to release its financial results on Feb 13, 2013.
Currently, InterDigital carries a Zacks Rank #2 (Buy).
We belive, Tellabs will benefit from the demand from wireless
operators as they continue to upgrade their network to support
the significant surge in data traffic around the world.
Additionally, the company has decided to reduce its expenses and
will cut 300 jobs, thereby resulting in improved margins going
Our major concern for Tellabs is the increasing competition in
its core wireless backhaul solutions segment. The company has
already lost a significant amount of business from its most
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Currently, Tellabs carries a Zacks Rank #3 (Hold).