Tellabs reports Q1 loss of USD43m, announces 665 job cuts
17 April 2003 Naperville, Ill., USA, Lightwave Europe--Tellabs today reported first-quarter 2003 revenues of USD223m and a net loss of USD43 million or 10 US cents per share.
17 April 2003 Naperville, Ill., USA--Tellabs today reported first-quarter 2003 revenues of USD223m and a net loss of USD43m or 10 US cents per share.
The company reduced quarterly operating expenses to USD144m, below its USD145m target. Operating cash flow was a negative USD11m including restructuring payments; before restructuring operating cash flow was a positive USD14m. The company ended the quarter with more than USD1bn in cash and marketable securities.
Tellabs' new leadership team says it intends to reduce operating expenses to USD125m per quarter by the fourth quarter of 2003, positioning the company to break even, and to drive growth in revenues and earnings.
As an initial step, Tellabs will reduce its US and international work force by 665 employees or 14% starting in April, and record a restructuring charge in the second quarter. Over the coming year, the company will continue to identify and implement actions to cut fixed costs through facility consolidation, increase returns from manufacturing operations and implement further cost reductions across the business - including work force reductions as needed.
To drive revenue growth, Tellabs says it will continue to reallocate product development resources to current and future markets such as IP and data that present the best customer and growth opportunities.
The company also will focus resources in growth geographies such as Eastern Europe, China and other countries in Asia. About 13% of Tellabs overall revenues came from new products in the quarter.
"Despite difficult market conditions, I'm confident the new Tellabs leadership team has the right strategy to chart our path to profitable growth," said Michael J. Birck, Tellabs chairman and CEO. "We are taking painful but necessary steps to better align our business with the realities of today's marketplace and to ensure a long-term competitive advantage for Tellabs."
During the quarter, Timothy J. Wiggins joined Tellabs as chief financial officer, bringing strong cost control and turnaround experience to the company. He joins Edward Kennedy, recently named president of Tellabs North America, and Anders Gustafsson, who was named president of Tellabs International in August, as senior leaders in the company's new leadership team.
Sales of optical networking systems, which include Tellabs' strategic North American products, were USD105m. Tellabs increased its market leadership in North American bandwidth management, according to RHK, which reported last month that Tellabs had 52% market share in 2002.
The company announced the sale of a Tellabs 7100 system to Sprint, its first to a leading U.S. carrier. About 7% of Tellabs' overall revenue came from new North American optical networking products, including the Tellabs 7100 system, the Tellabs 6500 transport switch and the Tellabs 6400 transport switch.
The company also announced sales of the Tellabs 6400 system to ITXC and Sungard. And Tellabs introduced the Tellabs 5500 NGX next-generation cross connect, which combines industry-leading optical and electrical interfaces into one system.
Next-Gen SDH and Managed Access Services
Sales of next-generation SDH and managed access services, which include Tellabs' strategic international products such as the Tellabs 6300 and Tellabs 8100 systems, totalled USD62m.
During the quarter, Tellabs recognised revenue from the new Tellabs 6350 transport switch, the industry's highest-density next-gen SDH system, which began shipping at the end of the first quarter. About 6% of Tellabs' overall revenues came from
new international products.