Telecommunications networking products company Tellabs Inc. (TLAB) on Tuesday posted a sharp growth in fourth-quarter profit, but revenues fell from last year as lower Broadband segment revenue offset Transport and Services segment revenue growth. Further, the company issued revenue forecast for the first quarter.
The Naperville, Illinois-based company's fourth-quarter profit grew to $62 million or $0.16 per share from $13 million or $0.03 per share in the year-ago quarter. The latest quarter results included a tax benefit of $23.4 million or $0.06 per share.
On a non-GAAP basis, earnings totaled $36 million or $0.09 per share, compared to $35 million or $0.09 per share in the prior-year period. Non-GAAP results exclude pretax charges of $14 million, including $5.0 million or 1.3 cents per share in equity-based compensation expense.
On average, 11 analysts polled by Thomson Reuters expected the company to post earnings of $0.07 per share. Analysts' estimates typically exclude special items.
Quarterly revenues declined to $389.3 million from the previous year's revenue of $408.3 million, as growth in Transport and Services segment revenue was offset by lower Broadband segment revenue. Eleven Wall Street analysts had a consensus revenue estimate of $391.08 million for the quarter.
Overall product revenue dropped 7.5% to $324.6 million from $351.0 million last year, as increased revenue from data products and Transport segment products was offset by lower managed access and access product revenue. Services revenue rose 12.9% to $64.7 million from the prior-year revenue of $57.3 million.
On a geographic basis, revenue from customers in North America was $255.4 million, down from $268.0 million in the year-ago period. Revenue from customers outside North America was $133.9 million in the latest quarter, a decline from $140.3 million reported a year ago.
Segment wise, the company's Broadband segment generated fourth-quarter revenues of $191.4 million, compared to $227.0 million last year, as higher revenues from data products was offset by lower revenue from managed access and access products. Segment profit was $44.4 million, up 25.4% from $35.4 million in the same quarter of last year.
Fourth-quarter revenue from the Transport segment were up 7.4% to $133.2 million from $124.0 million in the fourth quarter of 2008. Segment profit however dropped to $44.5 million from $46.3 million in the prior-year period.
Services segment revenues amounted to $64.7 million, an increase from the previous year's revenue of $57.3 million in the corresponding quarter of the previous year. Segment profit increased to $22.6 million from $19.0 million earned a year ago.
Operating expenses in the most recent quarter were $141.1 million, down $22.3 million, compared to $163.4 million in the same quarter of last year, as research and development costs were reduced under previously announced cost-reduction programs. Excluding intangible asset amortization and restructuring and other charges from each period, operating expenses decreased by $5.3 million, versus the prior year quarter.
Operating income advanced to $35.1 million, from $6.4 million earned in the comparable quarter of the previous year.
For the full-year 2009, the company reported net income of $113.6 million or $0.29 per share, compared to a loss of $930.1 million or $2.32 per share in 2008. Analysts expected earnings of $0.26 per share for the full year.
Tellabs' 2009 non-GAAP earnings were $119 million or $0.30 per share, compared to $102 million or $0.26 per share in 2008.
Total revenues for the year fell to $1.53 billion from $1.73 billion reported in the previous year. Eleven Wall Street analysts had a consensus revenue estimate of $1.53 billion for the year.
Looking ahead, the company projects first-quarter revenue to be $370 million, plus or minus 2%. Analysts are looking for revenues of $364.85 million for the first quarter. Non-GAAP operating expense is expected to be in the low $130 millions, which includes expenses resulting from the WiChorus acquisition.
For the full year 2010, Tellabs expect non-GAAP gross margin to be up over 2009, in the mid-40s range, depending on mix. The company also declared a new quarterly dividend of $0.02 per share, which is payable on February 26, to shareholders of record on February 12. The company also plans to continue its share repurchase program during 2010.
In addition, the company announced measures for restructuring, in an effort to shift more investment from TDM products to Ethernet and Internet Protocol or IP products, to improve Ethernet, IP and mobile packet core skill sets worldwide, to move its supply chain closer to suppliers, and to reduce general and administrative expenses.
Although the company plans to reduce its workforce by about 200 people over the next five quarters, Tellabs expects overall headcount to rise during 2010. Rob Pullen, Tellabs president and chief executive officer said, "Unfortunately, these changes are difficult but necessary to advance Tellabs strategy."
Tellabs shares, which have been trading between $3.52 and $7.70 in the past 52 weeks period, closed Monday's trading session at $5.90, down 6 cents or 1.01%. In the pre-market session, the stock is currently trading at $6.30, up 40 cents or 6.78%.
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