LISLE, Ill.- Despite first quarter news that was in line with Wall Street estimates, Tellabs Inc. said it will continue to “realign its cost structure” by reducing spending, cutting jobs, eliminating salary increases, cutting corporate officer pay, aligning its manufacturing with demand expectations and terminating its plans for the SALIX next-generation-switching product.
Specifically, the company will cut its work force by 550 people and consolidate excess facilities, assets and inventories. The layoffs only add to the 450 positions Tellabs cut during the first quarter, and the company said it does not plan to fill 1,100 open positions. The company expects these measures to reduce its overall cost structure by 5 to 6 percent.
Tellabs’ results were up from the year-ago quarter, but are still a far cry from the $890 million in sales and 39 cents earnings per share it projected at the beginning of this quarter. The company announced first-quarter sales were $772 million, up 21 percent from a year ago. In addition, first-quarter net income totaled $123 million, a 13-percent increase from a year ago. Diluted earnings per share also were up, to 29 cents per share, a 12-percent increase from last year.
“By paring back our efforts in next-generation switching, we are aligning with our customers’ priorities and strengthening our initiatives in high-growth areas such as optical networking,” said Richard C. Notebaert, Tellabs president and chief executive officer. He optimistically added, “Despite the current challenges, I am as confident as ever in Tellabs’ long-term prospects and our ability to deliver strong revenue and earnings growth in the future.”
Also as a consequence of “reduced and deferred spending by major communication carriers,” which the company blames for its lower-than-expected results, Tellabs adjusted its 2001 revenue expectations to $3.6 to $3.7 billion and lowered its 2001 earnings per share expectations to between $1.55 and $1.65.
