Tellabs Inc. (TLAB) declared its fourth quarter 2009 financial results today. Supported by huge cash generation from operations, management has decided to pay a quarterly dividend of 2 cents per share for the first time in the company’s history. The first dividend will be payable on Feb 26, 2010.
Total revenues of $389.3 million were down 4.7% on a year-over-year basis. This was almost at par with the Zacks Consensus Estimate of $390 million. The year-over-year revenue decline was a result of lower sales for the Broadband segment products partially offset by growth in the Transport and Services segment revenue.
On a GAAP basis, net income in the fourth quarter was $62.1 million or 16 cents per share compared to a net income of $12.8 million or 3 cents per share in the prior-year quarter. However, adjusted net income (excluding special items) in the reported quarter was $31.1 million or 8 cents per share, beating the Zacks Consensus Estimate of 7 cents per share.
Gross margin was 45.3% compared to 41.6% in the year-ago quarter. This reflected the aggressive cost cutting measures taken by management during the past one year. Operating expenses, in the same
quarter, were $141.1 million compared to $163.4 million in the prior-year quarter. Management has streamlined the operating cost structure to improve productive efficiency. Fourth quarter 2009 operating margin of 9% was highest since 2006.
At the end of fiscal 2009, Tellabs had $1,104.8 million of cash & marketable securities on its balance sheet compared to $1,152.1 million at the end of fiscal 2008. Tellabs’ balance sheet had no outstanding debt. During the same quarter, the company repurchased approximately 3.4 million of its outstanding common shares for a total consideration of $21.2 million. For the full fiscal 2009, Tellabs generated $234.4 million cash from operation compared to $130.8 million in the previous year. Yearly free cash flow was $188.5 million in 2009 compared to $80.7 million in the previous year.
Broadband Segment
Total revenues of the Broadband segment were $191.4 million, down 15.7% year over year. Within this segment, Data Product revenues were $90.5 million, up 51.8% over the year-ago quarter. Access revenues were $55.7 million, down 43.3% over the prior-year quarter. Managed Access revenues were
$45.2 million, down 34.7% year- over year. Broadband segment profit was $44.4 million, up 25.4% year over year. This was mainly due to higher level of sales from high-margin Data products.
Transport Segment
Total revenues were $133.2 million, up 7.4% year over year. This segment generated a profit of $44.5 million, down 3.9% year over- year. This was mainly due to lower level of sales from cross-connect and voice-quality enhancement products.
Services Segment
Total revenues stood at $64.7 million, up 12.9% year over year. This segment generated a profit of $22.6 million, up 19% year over year. This was primarily due to lower service-delivery costs.
Geographic Distribution
During the fourth quarter, the North American region generated $255.4 million of revenues, down 4.7% year over year. The rest of the world generated the remaining $133.9 million, down 4.6% year over year.
Portfolio Distribution
Growth products generated $188.4 million of revenues during the quarter, up 39% year over year. Core products generated the remaining $200.9 million, down 26.5% year over year.
Future Financial Outlook by Management
Management predicted that the company’s first quarter 2010 revenues to be $370 million. Revenues may fluctuate in the +/- 2% range. Non-GAAP gross margin is expected to be around 48.5% and non-GAAP operating expenses to be little over $130 million. Stock-based compensation expenses are projected to be approximately $4 million.
In the pre-market trade in NASDAQ, Tellabs’ stock price was up 47 cents (8%) to $6.37 per share.
Read the full analyst report on “TLAB”
Zacks Investment Research
