A continuous drop in share prices over the year along with
weaker business environment has forced
), to buy-back shares worth $224.6 million. The company will
commence its new share repurchase program from November, 26
Tellabs exited the third quarter of fiscal 2012 with $941.8
million of cash & marketable securities. So, the company's
plan to repurchase shares after a gap of seven quarters will not
only boost its share prices but will also drive the company's
earnings per share in the years to come.
Despite meeting the Zacks Consensus Estimates, Tellabs
reported dismal financial results for the recently concluded
quarter, where all the segments experienced decline in revenue
along with a loss in earnings.
Moreover, the company also presented a somber outlook for the
next quarter. Such poor performances were mainly attributable to
increasing competition in its core wireless backhaul solutions
segment and loss of major client like
) from its limited customer portfolio.
Such poor showdown by Tellabs was also reflected on its share
price movement recently, where the company shares hit a 19-year
low last week. Therefore, in order to recoup investors faith as
well as to maximize their wealth, the company reverts back to
share buy-back program, which will also drive share prices.
At present, 367 million shares of Tellabs are outstanding. So,
a repurchase of another 81 million shares will further reduce its
market cap below the $1 billion mark. Moreover, it is to be seen
how long the company can restore the investors' faith by means of
buying back shares and paying dividends instead of generating
profit form the business.
We maintain our long-term Neutral recommendation on Tellabs.
Currently, it has a Zacks #3 Rank, implying a short-term Hold
rating on the stock.
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