Tellabs to cut jobs, posts nearly $1B loss in Q3

Telecommunications equipment maker Tellabs Inc. announced today that it is cutting its workforce after reporting $999 million in losses for the third quarter.
During a morning conference call, Rob Pullen, company president and CEO, said the company will cut 280 jobs between now and the middle of next year and workers will be notified this week.
The company totaled $424 million in revenue for the quarter, which is a 7% decrease from the same quarter in 2007, when the company posted $458 million in revenue.
A reason for the loss is the company paid a non-cash goodwill impairment charge of $988 million and $9 million in restructuring charges for plans announced in previous quarters. The company also paid $11 million in other charges and a non-cash tax charge of $6 million for establishing a valuation allowance against deferred tax assets.
“The impairment is unfortunate, but it does not stop us from running the business,” Pullen said.
Company officials said the non-cash goodwill impairment charge represents a complete write-off of goodwill associated with Tellabs broadband and transport segments.
Despite the impairment, Pullen said the company achieved record data and IP networking revenue in its broadband segment of the business. Data networking revenue reached $68 million, a 19% increase from a year ago. However, total revenue for its broadband business was down 7%, $260 million, when compared to $279 million reported in the third quarter last year.
In its transport segment, the company reported $109 million in revenue, an 11% decrease from a year ago. Revenue in services came in at $55 million, a slight decrease from the $56 million reported a year ago.
As the company heads into the fourth quarter, officials are expecting a flat market. The company expects revenue for the final quarter of the year around $400 million.
“There has been a lot of turbulence with the stock market,” Pullen said. “There is a lot of economic uncertainty.”
Pullen said the company will focus on mobile backhaul, optical networking and business services as it moves forward. The company is also executing a $100 million cost-reduction plan. Additional information about the plan will be available next month.
Tellabs is based in Naperville, Ill., and customers include government agencies and wireline, wireless and cable television companies. According to the company, it is the leader in providing fiber-access equipment for North America.