22 July 2003 Naperville, Il -- Tellabs today reported that second-quarter 2003 revenues rose 5% to USD 234 million from Q1 revenues of USD 223 million. For the first time since the telecom downturn began in 2001, the company's Q2 revenues increased over Q1 figures.
Under generally accepted accounting principles (GAAP), Tellabs recorded a net loss of USD 111 million or 27 US cents per share for the second quarter of 2003. During the quarter, Tellabs recorded restructuring and other charges of USD 80 million.
This USD80 million included: USD 15 million for severance costs related to previously announced workforce reductions; USD 15 million for fixed-asset write-downs related to the workforce reduction and consolidation of operations; USD 3 million for facilities closure and miscellaneous licenses; USD 33 million related to excess and obsolete inventory; and USD 21 million related to inventory purchase commitments deemed to be excess.
Also included in the net charge is a USD 6 million reversal of previously recorded restructuring costs related to severance and estimated salvage value on asset disposals.
Non-GAAP quarterly operating expenses, excluding the effect of the charges described above, were USD 136 million, down 6% from USD 144 million in the first quarter and better than the company's target of USD 140 million. On this basis, Tellabs lost USD 31 million or 8 US cents per share.
"We're making real progress on Tellabs' path to profitable growth," said Michael J. Birck, Tellabs chairman and chief executive officer. "Revenues are up, expenses are down, and we're expanding Tellabs' growth opportunities in new data and IP markets to bolster our competitive advantage."
Tellabs' international revenues grew 14% sequentially, due to strength in the Asia-Pacific market and the successful launch of the Tellabs 6350 transport switch, which has become the fastest selling new product in the company's history with 100 systems ordered. International revenues reached a record 40% of overall Tellabs revenues; North American revenues were consistent with the first quarter. About 9% of Tellabs' overall revenues came from new products.
On 18 June Tellabs closed its acquisition of Vivace Networks, which enables Tellabs to target profitable niches of the USD 3 billion global service provider edge router and switch market. That market is projected to grow to USD 5 billion by 2005, according to industry analyst Infonetics Research.
Sales of optical networking systems, which include Tellabs' strategic North American products, were USD 93 million. About 3% of the company's overall revenues came from new North American optical networking products, reflecting the continued slow acceptance of new technology by carriers in the U.S. as a result of the telecom downturn.
During the quarter, the company secured its first order from an incumbent local exchange carrier for the new 5500 NGX transport switch, which more tightly integrates digital cross-connect and transport systems to eliminate redundant network elements, reduce the number of inter-machine tie-trunks and regain valuable floor space for customers.
The company also announced enhancements to the 7100 optical transport system and interoperability between the Tellabs 7120 advanced transport node and the 5500 NGX transport switches. Tellabs maintained its market-leading position in the U.S. bandwidth management market, according to the most recent data from industry analyst RHK.
Next-Gen SDH and Managed Access Services
Sales of next-generation SDH, the international transport format for digital information over fiber optic networks) and managed access services totalled USD 70 million. The new 6350 switch node, the industry's highest-density next-gen SDH system, became the company's fastest-selling new product ever, with 100 systems ordered. The first customers for the new Tellabs 6350 system included Telenor of Norway, Sonofon of Denmark and Tele2 of Sweden. About 6% of Tellabs' overall revenues came from new international products.
Sales of voice-quality enhancement, telephony distribution solutions and other revenues amounted to USD 33 million. Services revenues were USD 39 million in the second quarter of
More information at www.tellabs.com