LISLE, Ill.-Tellabs reported it expects first quarter net earnings to be lower than analysts’ estimates with revenue of approximately $630 million for the quarter ended March 31, an increase of 35 percent from the same period the previous year.
The company blamed lower gross profit margins for the earnings shortfall caused by higher-than-expected costs associated with components used in products, a high number of new systems and increased customer service installations, and higher-than-anticipated product and customer service revenues.
“In the first quarter, we satisfied very strong customer demand in the face of some not insignificant component issues,” said Michael Birek, chairman and chief executive officer of Tellabs. “That, combined with the accelerated R&D and SG&A expenses we forecasted in January in support of major new products and some shifts in product mix, strained profitability during the quarter. We remain confident in our ability to reach our objectives for the year.”
