Tellabs Hit by Competition

Analysts see gains by Adtran.
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Tellabs

(TLAB)

beat its earnings target on solid first-quarter sales, but shares fell as its outlook dimmed slightly.

The Naperville, Ill., telecom-equipment maker posted pro forma earnings of $34 million, or 8 cents a share. Those numbers compare with adjusted profit of $65 million, or 14 cents a share, in the year-ago quarter. The 8-cent profit beat the nickel a share analysts were looking for, according to Reuters Research.

Sales for the quarter ended in March were $452 million, down 12% from $515 million a year ago. Still, the figure was in line with analysts' expectations.

"Despite industry uncertainties, we are encouraged that Tellabs' new technologies are taking root in service provider networks," CEO Krish Prabhu said in a press release.

Excluding about $65 million in deferred revenue to be booked in the second quarter, Tellabs says it expects second-quarter sales to be flat to slightly down from first-quarter levels. The company guided for total second-quarter sales of about $510 million. Analysts were looking for second-quarter sales of $504 million.

Analysts say the company saw strong demand for its advanced phone switching gear but disappointing sales of its access products. The weak access equipment sales were likely due, analysts say, to increased competition from

Adtran

(ADTN) - Get Report

, which reported stronger-than-expected numbers last week.

Tellabs expects second-quarter revenue to increase about 10% to 15% from the first quarter, or about $500 million to $520 million. As part of second-quarter revenue, Tellabs expects to meet the criteria that would enable it to recognize $60 million to $70 million of revenue.

Tellabs shares fell 22 cents to $10.16 early Tuesday.