Tellabs Earnings Rise

Tellabs ( TLAB) rose Wednesday after posting strong gains in second-quarter earnings and revenue.

For the quarter ended June 30, the Naperville, Ill., maker of phone networking gear posted a profit of $50 million, or 12 cents a share. That reverses the year-ago loss of $111 million, or 27 cents a share. Revenue jumped 30% from a year earlier to $304 million.

The company said latest-quarter earnings hit 13 cents a share excluding restructuring charges. The second-quarter numbers easily exceeded Wall Street expectations. Analysts surveyed by Thomson First Call had forecast earnings of 6 cents a share on revenue of $280 million.

"Continuing strong demand for our products, combined with the benefits of restructuring and expense control, are driving growth and profitability at Tellabs," said CEO Krish A. Prabhu. "We are making solid progress in new product development and customer fulfillment, which will strengthen Tellabs' position as a strategic, global supplier leading the industry shift to broadband."

Sales of transport systems rose 74% to $161 million on strong wireless demand.

The news comes as Tellabs prepares to complete its acquisition of Petaluma, Calif.-based broadband gear outfit Advanced Fibre ( AFCI), which late Tuesday reported its own second-quarter numbers. AFC posted a second-quarter profit of a penny a share, down from 4 cents a year earlier, on revenue of $118.6 million.

"Our revenues came in somewhat lighter than we had anticipated," said Advanced Fibre chief John Schofield. "This was primarily due to a supply constraint of a key component that impacted FTTP shipments, which we expect to be resolved in the current quarter, a large customer's work force issue that limited the flow of orders from that customer and the timing of certain international orders in the quarter. On a positive note, we had three customers contribute over 10% of revenues during the quarter: BellSouth, Sprint and Verizon. I believe this development signals our progress in becoming a leading supplier of access equipment to large carriers, our stated goal for some time."

FTTP, or fiber to the premises, is a network-upgrade project that the big phone companies have undertaken as they and their big cable rivals seek to offer consumers high-speed video and data connections. AFC has been a leading supplier to the rollout of the project.

The companies said their merger continues to progress and they expect it to close by the end of October.

On Wednesday, Tellabs rose 29 cents to $7.96 and AFC dropped 12 cents to $18.10.

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