) declared disappointing first-quarter 2012 financial results,
missing the Zacks Consensus Estimates yet again. Quarterly total
revenue of $257.9 million was down 20% year over year, and well
below the Zacks Consensus Estimate of $277 million. All the three
reporting segments of Tellabs witnessed sales reductions.
On a GAAP basis, net loss in the first quarter of 2012 was
$139.8 million or a loss of 38 cent per share compared with a net
loss of $24.1 million or 7 cents per share in the prior-year
quarter. Adjusted (excluding special items) EPS in the reported
quarter was a loss of 6 cents, significantly higher than the Zacks
Consensus Estimate of a loss of 3 cents.
GAAP gross margin was 37.1% compared with 37.9% in the year-ago
quarter. Operating expenses, in the reported quarter, were $232.6
million compared with $254.9 million in the prior-year quarter.
Operating margin in the first quarter of 2012 operating margin was
a negative 53.1% compared with a negative 10.1% in the year-ago
During the first quarter of 2012, Tellabs consumed $37.5 million
of cash for operations compared with a negative $81.5 million in
the prior-year quarter. Free cash flow, in the reported quarter was
a negative $42.5 million compared with a negative $91.9 million in
the prior-year quarter. At the end of the first quarter of 2012,
Tellabs had $934 million of cash & marketable securities on its
balance sheet compared with $976.6 million at the end of 2011.
Tellabs' balance sheet had no outstanding debt.
Total revenue of the Broadband segment was $130.1 million, down
24.8% year over year. Within this segment, Data Product revenue was
$55.1 million, down 48.3% over the year-ago quarter. Access revenue
was $35.9 million, down 10.5% over the prior-year quarter. Managed
Access revenue was $39.1 million, up 48.1% year over year.
Broadband segment profit was $8 million compared with $19.7
million in the year-ago quarter. The huge decline in segment profit
was driven by lower level of overall Broadband segment revenue.
Total revenue of the Transport segment was $79.6 million, down
19.9% year over year. Decline in revenue resulted from lower
sales of digital cross-connect products and optical transport
systems. The segment generated a profit of $8.2 million, down 48.8%
year over year. This was mainly due to lower revenue from
high-margin digital cross-connects.
Total revenue of the Services segment was $48.2 million, down
3.6% year over year. Decline in revenue was attributable to
lower deployment services revenue in North America. The segment
generated a profit of $15.2 million, up 52% year over year, mainly
due to lower level of services costs.
In the first quarter of 2012, North America region generated
$126.6 million (49% of total revenue) of revenue compared with
$175.1 million in the prior-year quarter. The rest of the World
generated the remaining $131.3 million (51% of total revenue) of
revenue compared with $147.3 million in the prior-year quarter.
In the first quarter of 2012, Growth products generated $147
million of revenue compared with 194.4 million in the prior-year
quarter. Growth products now constitute 57% of total revenue. Core
products generated the remaining $110.9 million compared with $128
million in the prior-year quarter.
Future Financial Outlook
Management expects its second-quarter 2012 revenue to be in the
range of $280 million to $305 million. Non-GAAP gross margin is
expected to be 40%, plus or minus 1 or 2 percentage points,
depending on product mix. Non-GAAP operating expenses are expected
to be in the mid $100 million range.
Our major concern for Tellabs is the increasing competition in
its core wireless backhaul solutions segment. The company already
lost significant amount of business from its most important
). Currently, we maintain a long-term Underperform recommendation
on Tellabs. The company also holds a short-term Zacks #5 Rank
AT&T INC (
): Free Stock Analysis Report
TELLABS INC (
): Free Stock Analysis Report
To read this article on Zacks.com click here.