missed third-quarter revenue forecasts and guided lower for the fourth quarter, sending shares lower in early trading.
The Naperville, Ill., phone-system equipment shop posted an adjusted profit of $19 million, or 5 cents a share, which excludes a massive goodwill impairment charge of $988 million as well as other one-time items. That compares with pro forma earnings of $14 million, or 3 cents a share, a year ago. Analysts surveyed by
expected Tellabs to earn 3 cents a share.
Tellabs said the impairment charge represents a complete write-off of the goodwill associated with its broadband and transport segments.
Total sales for the quarter were $424 million, 7% worse than the year-ago level of $458 million and slightly less than the $425.4 million analysts expected. Tellabs said adjusted gross margin increased to 39% from 35% in the year-ago quarter.
Tellabs CEO Rob Pullen said that despite "successfully" executing in the third quarter, the company needed to reduce its workforce and write down goodwill.
"Going forward, we are focusing future investments in our target solutions -- mobile backhaul, optical networking and business services," Pullen said in a statement. "We are also increasing investment in our sales channels."
Looking ahead, Tellabs says it "does not expect to see the normal fourth-quarter seasonality," and that fourth-quarter revenue will be flat to down from third-quarter results. That would equal a range of $424 million to the low $400 millions, the company said. Gross margins are expected to rise slightly from the third quarter. Analysts had been looking for sales of $440.6 million and a gross margin in the 35% to 36% range.
Shares of Tellabs fell 2 cents, or 0.5%, to $3.89 in early trading. Elsewhere in the networking space,
was up 0.2%, while
was losing 1.5%.