Tellabs Beats Expectations But Takes A Step Back Anyway

Tellabs (NAS: TLAB) reported earnings on Jan. 31. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 30 (Q4), Tellabs met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue dropped significantly and GAAP loss per share dropped. The non-GAAP profit was a surprise, as analysts had predicted a loss.

Margins improved across the board.

Revenue details
Tellabs reported revenue of $316.8 million. The 14 analysts polled by S&P Capital IQ wanted to see sales of $315.5 million. Sales were 23% lower than the prior-year quarter's $410.5 million.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.01. The 13 earnings estimates compiled by S&P Capital IQ predicted -$0.01 per share on the same basis. GAAP EPS were -$0.01 for Q4 versus -$0.03 per share for the prior-year quarter.


Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 42.5%, 460 basis points better than the prior-year quarter. Operating margin was -1.1%, 50 basis points better than the prior-year quarter. Net margin was -1.5%, 120 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $277.6 million. On the bottom line, the average EPS estimate is -$0.03.

Next year's average estimate for revenue is $1.18 billion. The average EPS estimate is -$0.01.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 400 members out of 445 rating the stock outperform, and 45 members rating it underperform. Among 109 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 104 give Tellabs a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Tellabs is hold, with an average price target of $4.90.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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