Tellabs to cut 225 jobs as earnings fall 78 percent
Network equipment maker Tellabs Inc. Tuesday posted a 78 percent drop in quarterly earnings and said it will cut 225 jobs as part of another restructuring plan to improve profitability.
Naperville-based Tellabs, which is a supplier to major phone companies like AT&T Inc. and Verizon Communications Inc., said its customers aren't as enthusiastic now about the roll-out of new wireless and video services as they were a year ago.
"I don't think that there's any strong signal that suggests carriers are consciously pushing out projects; but like anyone else they're concerned about the global economy, so we'll just have to wait and see what they do with their capex (capital spending) in '08," said Tellabs Chief Executive Krish Prabhu on an analyst call.
Tellabs said its net profit in the fourth quarter was $6.3 million, or 1 cent per share, compared with $29.1 million, or 7 cents per share, a year earlier.
Earnings excluding special items but including stock-based compensation expense were 3 cents per share, ahead of the average analysts' forecast of 1 cent per share, according to Reuters Estimates.
Fourth-quarter revenue rose 3 percent to $469.1 million. Analysts were looking for Tellabs to report fourth-quarter revenue of $461.1 million, according to Reuters Estimates.
"We are encouraged by the better-than-expected results and the continued effort to improve the operating model," Tim Long, analyst at Bank of America securities, said in a note to clients.
Tellabs said it is seeking to cut 225 jobs, or about $100 million, with the latest restructuring, which should be completed later this year. Last September, it cut about 125 jobs.
The cuts collectively account for around 10 percent of the company's headcount. Because the company had not yet notified the employees who will be affected, it could not discuss the impact on specific locations or positions, spokesman George Stenitzer said.
Workers will get severance packages and outplacement services, he said.
Tellabs employed about 3,700 workers as of December, down from 3,800 last September.
The company said it will take charges of $12 million to $14 million during 2008, including around $8 million in the first quarter of 2008.
On the other hand, Tellabs continues to hire engineers, customer service and other positions. It now has 60 positions open, including 17 in Naperville, Stenitzer said.
Tellabs expects current market conditions to continue in 2008 and sees first-quarter revenue in the mid-$450 million range.
Also, the company continues to look for a replacement for Prabhu, who said in November that he would resign as of March 1.