Tellabs earns 63 cents a share sales up 32.5%

Stock price surges, as does that of Ciena, which it is buying

Telecommunications

July 17, 1998|By Mark Ribbing | Mark Ribbing,SUN STAFF

Tellabs Inc., the telecommunications equipment maker that is buying Linthicum-based Ciena Corp., reported strong increases in quarterly earnings and sales yesterday. Shares of Tellabs and Ciena rose sharply.

For its fiscal second quarter, which ended July 3, Tellabs reported net income of $119.04 million, or 63 cents per diluted share. Excluding the effects of a one-time stock sale and an asset write-off, Tellabs had $86.3 million in net income, or 46 cents per share.

In the similar period of 1997, Tellabs had $58.76 million in net income, or 32 cents per diluted share.

"The earnings were much better than expected," said Nikos Theodosopoulos, an analyst with Warburg Dillon Read LLC in New York. "People were looking for 42 [cents per share] and they came in at 46."

Shares in Lisle, Ill.-based Tellabs were up $6.0625 to $84.75. Ciena shares climbed $6.75 to $84. Both issues trade on the Nasdaq stock market.

Tellabs makes switching systems that allow communications to travel between different networks. Such gear has become increasingly lucrative as networks have become more extensive and complex.

The company reported $387.72 million in sales for the quarter, 32.5 percent more than the $292.7 million it took in during the similar period last year.

On June 3, Tellabs announced that it was acquiring Ciena in a one-for-one stock swap valued at $6.9 billion. The deal is expected to close by the end of September.

"Tellabs is a good company, and they're in an explosive market," said Michael S. Davies, an analyst at Punk, Ziegel & Co. in New York.

"The pending acquisition of Ciena only gives them greater sustainability to continue that growth."

Pub Date: 7/17/98

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