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Tellabs issues profit warning

The company says it will break even on about $500 million in revenue in its second quarter, 36 percent to 39 percent below its previous forecasts of $780 million to $820 million in revenue.

Tellabs announced a profit warning for its second quarter Tuesday, the third time in the past four months that the struggling telecommunications equipment maker has lowered earnings forecasts.

Tellabs executives said the company will earn about $500 million in second-quarter revenue, 36 percent to 39 percent below the company's previous forecasts of $780 million to $820 million in revenue.

The company expects to break even for the quarter, with no profit or loss per share. Tellabs executives previously expected earnings of 29 to 32 cents a share.

Company executives say Tellabs continues to be hammered by slower spending by telecommunications service providers, which has hampered the entire networking industry and forced Cisco Systems, Nortel Networks, Lucent Technologies and others to issue profit warnings, lay off employees and reorganize.

Shares in the company traded at $21.20 on Tuesday.

Tellabs issued earnings warnings twice for the first quarter, when the company made a profit of $122.5 million, or 29 cents a share, on revenue of $772.1 million. To control costs, the company in April announced a hiring freeze, cut 550 jobs, eliminated salary raises and canceled a new line of phone equipment.

Tellabs executives on Tuesday said its service provider customers continue to be cautious with their spending. The company builds equipment used to manage traffic on phone networks.

"While we continue to see caution from our customers in the pace of equipment deployment, our market position remains intact, and we are focused on ensuring the most profitable path through the current environment," Tellabs CEO Richard Notebaert said in a statement.