Tellabs helps the world's leading communications service providers build tomorrow's converged networks of voice, data and video. Tellabs employees design, build and service optical networking, broadband access and next-generation switching equipment. (Company Press Release)
One Tellabs Center 1415 West Diehl Road Naperville, IL 60563, USA Phone: 630-798-8800 Fax: 630-378-4590 Web: www.tellabs.com Email: tom.scottino@tellabs.com
Industry:Communications Components Sector: Computer and Technology Fiscal Year End:December Last Reported Quarter:06/30/10 Next EPS Date:10/25/10
Capital Structure Solvency and Cash Flow
Balance Sheet
Exiting 4Q09, cash, cash equivalents, and marketable securities were approximately $1,105.0 million versus $1,254.7 million in 3Q09. The q/q decline was due to cash outlays associated with the WiChorus acquisition and repurchase of shares. Accounts receivable were $334.2 million versus $324.0 million in 3Q09. Inventories were $127.7 million versus $127.2 million in 3Q09.
Days sales outstanding (DSO) in the quarter was 77 days versus 75 days in 3Q09 and inventory turns were 6.6x versus 7.1x in 3Q09.
Cash Flow
Cash flow from operations was $60.0 million in 4Q09 versus $66.0 million in 3Q09. Capital expenditure was roughly $21.0 million versus $10.8 million in 3Q09. In FY09, Capex was $46.0 million.
In FY09, Cash flow from operations was $234.4 million, up from $130.8 million in FY08.
Share Repurchase
TLAB repurchased approximately 3.4 million shares at a cost of $21.2 million in 4Q09 and 12.9 million shares at a cost of $82.9 million, under the previously announced share repurchase programs.
On August 10, 2009, TLAB announced its intention to repurchase its common stock under an existing Board of Directors authorization, previously announced on Nov. 8, 2007. By FY10, the Company will likely repurchase up to $200.0 million under the previously announced repurchase program. Hence, management announces that it has plans to continue its share repurchase program during FY10. The resumption follows the Company’s significant curtailment of stock repurchases since 4Q08.
Dividend
On January 26, 2010: TLAB announced the initiation of $0.02 quarterly dividend. The first cash dividend is payable on Feb. 26 to shareholders of record as of the close of business on Feb. 12.
Restructuring update
TLAB announced a restructuring program designed to shift investment from legacy TDM business toward growing IP and mobile packet core areas. The program, starting in 1Q10, impacts 200 jobs and is expected to last five quarters and generates $20.0 million in savings. Charges from the program are expected to be $11.0-14.0 million ($9.0 - $11.0 million for workforce and about $1.0 - $2.0 million for facilities). However, management expects savings to be reinvested and expects overall headcount to rise in 2010.
Last edited Mon Feb 08, 2010 03:23 AM by SreelaBose (Zacks Investment Research)
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Governance Social Responsibility and Employee Relations
On December 2, 2009, TLAB announced that it completed its acquisition of WiChorus, a leading provider of mobile packet core solutions, on December 1, 2009 for roughly $185.0 million in cash. The closing follows Tellabs’ receipt of Hart-Scott-Rodino approval from the Federal Trade Commission. The acquisition enables Tellabs to expand into mobile packet core networks, deliver new applications and provide significant savings for mobile carriers.
The acquisition brings a new breakthrough product to Tellabs that is purpose-built for 4G, LTE and WiMax. It addresses the unique requirements of the mobile Internet as it:
• Includes a full range of mobile IP products (from low entry price to highly scalable) for applications including GGSN, LTE and WiMax, plus new application enablement with superior DPI capability.
• Offers 8 times more throughput, 4 times more simultaneous Internet connections and active users, compared with competitive platforms in gateway applications.
• Uniquely combines world-class application analytics with a mobile core gateway for improved traffic engineering and network optimization.
• Enables customers to analyze and monetize more than 400 of the top mobile Internet applications.
• Makes mobile networks content-aware and context-aware, with personalized application-awareness.
• Outperforms other platforms in delivering mobile Internet capacity. For example, competitors’ capacity significantly degrades (as much as 30% to 50%) during deep-packet inspection (DPI).
• Delivers new and differentiated applications such as Internet offload and distributed LTE gateway. It can offload as much as 70% of traffic at the network edge, increasing core network efficiency and improving user experiences. As a result, customers can save as much as 50% in capital expenses, compared with the present method of operation.
Tellabs retained WiChorus’ office in San Jose, Calif., and employees around the world. Rehan Jalil, former CEO and founder of WiChorus, has joined Tellabs as Senior Vice President - mobile Internet, reporting to Pullen. The combined company employs about 3,300 people worldwide.
Others
On December 15, 2009, Optimum Lightpath and Tellabs partnered to deliver low-latency, high bandwidth services. Optimum LightpathSM, a market leader in Ethernet-based communication solutions and Tellabs have built a next-generation optical network to deliver flexible, high-bandwidth services to businesses in Connecticut, New Jersey and New York.
Last edited Mon Feb 08, 2010 03:25 AM by SreelaBose (Zacks Investment Research)
• Competition from the large suppliers is intensifying as they enhance service offerings.
• The analysts are concerned about TLAB’s long-term positioning and product portfolio.
• Relying on certain key customers, like Verizon, poses a threat to TLAB’s pricing and market share.
• Many equipment providers to the Service Provider market have been forced to restate or delay the recognition of their revenue, attributable to the extended acceptance criteria.
Last edited Mon Feb 08, 2010 03:27 AM by SreelaBose (Zacks Investment Research)
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