Tellabs shares closed up $2.75, or 6 percent, to $48.44, Thursday despite the company's warning that its first-quarter and fiscal 2001 sales and earnings will fall
short of analysts' estimates.
After dropping to $40.13 in after-hours trading Wednesday, the stock managed to recover Thursday even though several analysts cut their first-quarter and fiscal 2001 estimates.
The maker of voice, data and video network equipment said it now expects
to record sales of between $830 million and $865 million in the quarter and
earnings of between 35 cents and 38 cents a share.
First Call consensus pegged Tellabs for a profit of 38 cents a share on
sales of $876 million.
Tellabs executives blamed the shortfall on slow sales of its Cablespan
product--which enables voice and data services to be transmitted over cable
television networks--as well as its inability to recognize sales from
shipments of its Titan 6500 systems.
It expects fiscal 2001 sales of between $4.35 billion to $4.4 billion and
earnings of between $2.12 and $2.17 a share, slightly below previous
estimates of $4.4 billion and $2.17 a share.
On Thursday, USB Warburg analyst Nikos Theodosopoulos cut the stock's
12-month price target to $50 a share from $58 a share.
WR Hambrecht adjusted its sales and earnings estimates to match the
guidance provided by Tellabs, but maintained its "neutral" rating.
Salomon Smith Barney cut the stock from a "buy" rating to an
"We are increasingly concerned about the underlying slowdown in carrier
spending activity and a current lack of visibility in the telecom
environment," Deutsche Banc Alex Brown analyst George Notter said in a
research report. He maintained his "buy" rating on the stock.
Separately, Tellabs said it closed the acquisition of Future Networks, a
voice and cable modem technology company. Goodwill related to the purchase
will dilute earnings by 4 cents a share in 2001 and 5 cents a share in 2002.
Last quarter, Tellabs met analysts' estimates when it posted a profit of
$232 million, or 56 cents a share, on sales of $1 billion.
The stock moved as high as $76.94 in July before falling to a low of
$37.63 in October.
Twenty-three of the 27 analysts following the stock rate it either a
"buy" or a "strong buy."