Q&A: Tellabs CEO Rob Pullen

Last week, Tellabs made a nice bounce back earnings release, reporting progress in key areas like data revenue growth while also sharing a positive outlook for 2010. The market liked the news, sending shares up more than 10% the day of the announcement – a rise that started back in mid-December and continued into this week.

Today, in an internal company announcement, Tellabs will inform its staff it has set aside its largest bonus compensation pool in more than ten years – a period of time that's seen the telecom industry suffer multiple economy-based downturns while also wrestling with consolidation and massive technology change. The company believes that gesture, along with its positive earnings report and first-ever dividend, also announced last week, is a signal that Tellabs is back on solid footing and moving again toward growth and a “startup mentality” focused on innovation.

Connected Planet talked with Tellabs CEO Rob Pullen about the Tellabs turnaround, where the vendor sees growth and new opportunities and how the company has positioned itself to move into 2010 and beyond.

Connected Planet: How would you characterize the past few years, where you're at now, and what it took to get here?

Rob Pullen: I'd say we continue to transform Tellabs, with our focus in the mobile internet space in general, now both in the mobile backhaul and in the packet core, [as well as] the transition to optical networking and in business services delivery. It's been a tough economy over the past year, but despite all that we managed even in a decline of 12% of our revenue to increase our operating income by 39%. So 'turnaround' or ' transformation' are two words that are probably legitimate.

ConnectedPlanet: So where is the growth area or sweet spot now for Tellabs? What looks like the best addressable growth market for Tellabs moving forward?

Rob Pullen: It's the mobile Internet. We think there's a perfect storm or confluence of at least three events: the invention of the smartphone, the handheld computer, is one; whether the iPhone, the iPad or any other derivative. Second, it's the transition of people wanting information anywhere anytime, and the transition of 2G to 3G and 3G to 4G. Finally it's the Web that's changing too. We believe the Web has gone from what used to be a search engine; to mid-life and social networking, where it is today, with Facebook and Twitter and so on; to what we believe is going to happen next, that the service providers will offer more personalized web services to individuals, given their permission.

It's that confluence of events or perfect storm which is why we emphasize mobile backhaul today and the transition from time division to packets as a more cost effective way to handle the traffic for mobile Internet and video.  And why now in this tough economy, we acquired WiChorus to focus on the packet core, which we believe will be the brains of that mobile internet

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