Tellabs Inc. (Nasdaq: TLAB) said Tuesday it hit lowered estimates with a first quarter operating profit of 26 cents a share. The company warned earlier this month that its earnings would be hurt by lower profit margins.
Shares in the telecommunications equipment company closed at 43 5/16 Monday, well below their 52-week high of 77 1/4. The stock plunged earlier this month when Tellabs warned it would miss first quarter expectations, blaming lower gross profit margins, mostly stemming from higher-than-expected component costs and increased customer service installations.
The company said its net income for the quarter ended March 31 was $120 million, or 29 cents a share, compared with $101 million, or 24 cents last year, including one time gains and charges. Excluding the one-time items, Tellabs earned 26 cents a share, matching First Call's prediction.
In the quarter, Tellabs recorded a a pre-tax gain of about $19.1 million on the sale of stock, a pre-tax gain of about $4.58 million on a distribution of one of the company's technology investments, and a pre-tax charge of $5.76 million because of the acquisition of SALIX Technologies.
Sales for the first quarter was $639.5 million, up 36.1 percent compared with last year's $469.8 million.
The company also said accelerated R&D expenses strained profitability and resulted to the lowered first quarter earnings. "We experienced very strong customer demand in the first quarter,'' said Tellabs Chairman and CEO Michael J. Birck, who added that the company is confident it will reach objectives for the rest of fiscal 2000.
Tellabs competes with Alcatel (NYSE: ALA), Lucent (NYSE: LU) and Nortel Networks (NYSE: NT).