Tellabs to hand international manufacturing, employees to Elcoteq

14 November 2003 High Wycombe, UK Lightwave Europe -- Tellabs says it will outsource manufacturing of its international products and transfer ownership of its Espoo, Finland, manufacturing operations to Elcoteq Network Corp. Tellabs also said that some of its employees who will become employees of Elcoteq after the required approvals from the competition authorities have been obtained, which is expected to happen by the end of 2003.

Nov 14th, 2003

14 November 2003 High Wycombe, UK Lightwave Europe -- Tellabs says it will outsource manufacturing of its international products and transfer ownership of its Espoo, Finland, manufacturing operations to Elcoteq Network Corp. Tellabs also said that some of its employees who will become employees of Elcoteq after the required approvals from the competition authorities have been obtained, which is expected to happen by the end of 2003. At that time the manufacturing transition will begin. Production is forecast to continue without delays.

In addition, Tellabs is aligning its international R&D spending to what it calls "the industry average," after what it considers a high level of R&D in the last 18 months. The company will continue to focus on enhancing its IP/MPLS and next-generation SDH data capabilities. Approximately 300 employees will be affected by the outsourcing and the R&D alignment.

"These decisions are difficult but essential to move Tellabs along the path to profitable growth," said Anders Gustafsson, president, Tellabs International. "The outsourcing of manufacturing enables Tellabs to focus 100% of our energies on product development and customer relationships as Elcoteq focuses on its core business of electronics manufacturing services. And, having invested heavily in development of our international products, we now need to align our R&D spend to the industry average."

Tellabs employees will continue to work directly with customers on ordering, configuration, and shipping of products.

As a result of outsourcing, Tellabs expects to benefit from lower manufacturing costs and by freeing up capital now tied up in equipment and inventory. Since implementing outsourced manufacturing will not begin until approvals are received from the competition authorities, these benefits will be slight in early 2004 and they will increase over time.

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