) a leading diversified manufacturer of telecom equipment signed
a deal with
WESCO International Inc.
) to supply Tellabs' Optical LAN solution through its business
arm, Communications Supply Corporation (CSC).
This recent contract will certainly boost the supply of Tellabs'
Optical LAN in the U.S. by soldifying its presence across
different parts of the country, where Wesco enjoys a strong
Tellabs' popular products, which include Tellabs 7000 series of
optical transport systems, Tellabs 5000 and 6300 series of
transport systems with optical interfaces save 80% of energy
consumption. Moreover, by eliminating conventional copper-based
Ethernet LANs, it slashes costs up to 70% for any organization.
Tellabs reported disappointing first-quarter 2013 results, with
both the top line and bottom line missing the Zacks Consensus
Estimate. Tellabs' globally reputed high-margin digital
cross-connect products continued to show a downtrend.
Tellabs is encountering serious issues in its core wireless
backhaul solutions segment.
) was the major customer for its 8800 multi-service router.
However, AT&T decided to upgrade its network with pure
Ethernet solutions since the company is aggressively deploying 4G
As a result, AT&T is presently using Ethernet routers of
Cisco Systems, Inc.
) and Alcatel-Lucent, S.A. instead of Tellabs. AT&T
historically generated 35% of the company's total sales and 40%
of the Data product revenues. In the first quarter of 2013, Data
product revenues were down 52.6% year over year.
CISCO SYSTEMS (CSCO): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
TELLABS INC (TLAB): Free Stock Analysis
WESCO INTL INC (WCC): Free Stock Analysis
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The Optical segment, which develops these popular Optical LAN
products are the major contributor to Tellabs' overall revenue
and in fiscal 2012 it accounted for 41% of the total revenue.
Hence, we believe that the recent deal with Wesco will certainly
improve the company's top line going forward.
Currently, Tellabs carries a Zacks Rank #4 (Sell).