Tellabs Drops After Slashing Earnings Projections

Tellabs (Nasdaq: TLAB) plummetedUS$7.87 to $32.88 early Friday after the telecommunications equipment makerslashed its first-quarter earnings projections for the second time in amonth.

The Lisle, Illinois-based firm said it was forced to revise its guidance asa result of reduced or delayed spending by major communications carrierslate in the quarter.

“The health of our business depends on the health of our customers, andwe’re seeing caution from them in the current economic environment,” saidTellabs president and chief executive officer Richard C. Notebaert.

Tellabs said it now anticipates first-quarter sales to drop to $772million. At the start of the quarter, Tellabs said it would pull in revenueof $865 million to $890 million, however, the company lowered that range to$830 million to $865 million when it cut estimates the first time at thebeginning of March.

A year ago, Tellabs said it earned a first-quarter profit from operations of$108.1 million, or 26 cents per share, on sales of $639.5 million.

It also expects to earn 29 cents per share for the period, down from itspreviously reduced forecast of 35 cents to 38 cents. Analysts surveyed byFirst Call/Thomson Financial had estimated Tellabs would earn 36 cents pershare.

Similarly, dozens of suppliers of telecommunications equipment andcomponents have cut their forecasts this year as customers slow capitalspending. Top telecommunications supplier Nortel Networks (NYSE: NT)cut itsfirst-quarter estimates for a second time in late March.

Meanwhile, sector leader Lucent Technologies (NYSE: LU) fell to an all-timelow on Wednesday as the company rejected rumors that it was consideringfiling for bankruptcy.

Tellabs — whose customers include U.S. phone giants SBC Communications, Verizon Communications and Sprint — will reportfirst-quarter results on April 18th.

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