Q4 2011 Earnings Call
January 31, 2012 8:30 am ET
Tom Scottino -
Robert W. Pullen - Chief Executive Officer, President and Director
Thomas P. Minichiello - Acting Chief Financial Officer, Chief Accounting Officer and Vice President of Finance
Rod B. Hall - JP Morgan Chase & Co, Research Division
Joseph Longobardi - RBC Capital Markets, LLC, Research Division
Alex B. Henderson - Miller Tabak + Co., LLC, Research Division
Simon M. Leopold - Morgan Keegan & Company, Inc., Research Division
Nikos Theodosopoulos - UBS Investment Bank, Research Division
Michael Genovese - MKM Partners LLC, Research Division
Jim Suva - Citigroup Inc, Research Division
George C. Notter - Jefferies & Company, Inc., Research Division
Jeffrey T. Kvaal - Barclays Capital, Research Division
Ehud Gelblum - Morgan Stanley, Research Division
Todd K. Koffman - Raymond James & Associates, Inc., Research Division
Previous Statements by TLAB
» Tellabs' CEO Discusses Q3 2011 Results - Earnings Call Transcript
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» Tellabs' CEO Discusses Q1 2011 Results - Earnings Call Transcript
Good morning. My name is Brooke, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Tellabs Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Tom Scottino, you may begin your conference.
Thank you, and good morning, everyone. With me today are Tellabs' CEO, Rob Pullen; and our Interim Chief Financial Officer, Vice President of Finance and Chief Accounting Officer, Tom Minichiello. If you haven't seen the news release we issued this morning, you can access it at our tellabs.com website.
Before we begin, I'd like to remind you that this presentation contains forward-looking statements about future results, performance or achievements, financial and otherwise. These statements reflect management's current expectations, estimates and assumptions. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause Tellabs' actual results, performance or achievements to be materially different. A discussion of the factors that may affect future results are contained in Tellabs' most recent SEC filings.
The forward-looking statements made in this presentation are being made as of the time and date of its live presentation. If the presentation is reviewed after the time and date of its live presentation, it may not contain current or accurate information. Tellabs disclaims any obligation to update or revise any forward-looking statement based on new information, future events or otherwise.
This presentation may also include some non-GAAP financial measures. Reconciliation between our non-GAAP financial measures and GAAP financial measures can be found at our tellabs.com website and our SEC filings.
Having said all that, I'll turn the call over to Rob.
Robert W. Pullen
Thanks, Tom, and good morning, everyone. Tellabs is focusing our business and restructuring our operations. In a climate of economic uncertainty, Tellabs needs to align expenses with revenue, so we're working to reduce our operating expenses and costs by $100 million. That means stopping new development work on the Tellabs 9100 LTE product. We will continue to support, however, Tellabs 9100 WiMAX customers. Unfortunately, this new restructuring will affect about 530 people starting today and continuing through the first quarter of 2013. We are consolidating R&D facilities in a fewer locations to gain efficiencies. We'll close facilities in Petaluma, California, Vancouver, Canada, Bangalore, India and Karachi, Pakistan. These actions result from Tellabs' strategic review of the business.
Going forward, we will focus on helping our customers address the trends that are driving huge growth in data and video traffic. These trends, as all of you know, include smartphones, tablets, smart TVs and cloud computing. Tellabs will focus our solutions where customers face major challenges and need Tellabs the most. We address these needs through our next-generation portfolio for the smart mobile Internet, including Tellabs Mobile Backhaul Solution, Tellabs Packet Optical Solution and professional services such as Insight Analytics. We'll also continue to develop Tellabs optical LAN.
Our goal is to build Tellabs' market share in mobile backhaul and packet optical networks by helping customers succeed in a challenging environment, where it's unsustainable to continue increasing CapEx in line with traffic growth. Instead, we can help customers reduce CapEx and OpEx needs, so they can lower their cost per bit dramatically, improve availability and ensure quality and reliability.
Now, let's look at Tellabs' fourth quarter results. Fourth quarter revenue was $317 million within our guidance. Fourth quarter revenue outside of North America was $171 million or 54% of overall revenue. On a non-GAAP basis, we earned $4 million or $0.01 per share in the fourth quarter of 2011.
Fourth quarter 2011 non-GAAP gross profit margins were the highest in 5 quarters at 42.7%, up from 41.6% in the third quarter. Compared with the year-ago quarter, gross margins were up more than 4 percentage points. Non-GAAP operating expenses in the fourth quarter were down slightly from the third quarter at $131 million and down about $20 million from the year-ago quarter. Non-GAAP operating profits were $4 million compared with $6 million in the year-ago quarter. Non-GAAP operating margin was 1.3% compared with the 1.4% in the year-ago quarter.
Now let's turn to Tellabs' full year 2011 results. Our annual revenue was $1,286,000,000. Revenue outside of North America grew 27% year-over-year to $636 million in 2011. That marked Tellabs' highest revenue outside of North America since the year 2000. Tellabs' revenue outside of North America was 49% of overall 2011 revenue, the highest percentage ever. Growth products generated 59% of overall revenue, up from 56% in 2010. Tellabs' non-GAAP 2011 net loss was $18 million or $0.05 a share. While we used some cash in the fourth quarter, our balance sheet remained strong with nearly $1 billion in cash and equivalents and no debt.