Tellabs Beats Targets, Cuts Deeper

The telecom equipment maker delivers solid numbers and another round of firings.
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Tellabs

(TLAB)

posted solid fourth-quarter results and outlined plans to cut another 8% from its workforce.

The Naperville, Ill., phone-system equipment shop posted an adjusted profit of 4 cents a share. That compares with pro forma earnings of 8 cents a share a year ago and beats the penny profit analysts were looking for, according to Yahoo! Finance.

Total sales for the quarter ended last month were $469 million, better than the year-ago level of $455 million and more than the $459 million analysts expected.

Squeezed by stale products and a consolidation among its telco customers, Tellabs says it needs to swing the ax again. The company will cut an additional 225 employees on top of the 125 jobs it vowed to slash in September.

The restructuring will cause the company to take a charge of about $13 million, with $8 million of that coming in the first quarter.

Looking ahead, Tellabs says it expects sales in the seasonally weaker first quarter to be around $450 million, with gross margins widening to 37% from the 33.7% level in the fourth quarter. Analysts had been looking for sales of $446 million and a gross margin in the 32% range.

The news comes as Tellabs battles with rivals such as

Nortel

(NT)

,

Ericsson

(ERIC) - Get Report

and

Alcatel Lucent

(ALU)

in a market for telecom gear that has cooled off since summer.

Shares fell 13 cents to $6.25 in premarket trading Tuesday.