Tellabs cuts investment in access business

“Normally we’d see a sequential revenue increase in [the fourth quarter],” Wiggins said. “Based on backlog order flow and feedback from our field sales forces, we don’t believe that to be the case.”

Citing “unprecedented economic uncertainty,” Wiggins said, “It’s difficult to understand how risks in the overall economy affects our customers’ spending.”

Revenue from Tellabs’ access business increased nearly 10% sequentially in the quarter, contributing slightly more than a fourth of the company’s overall revenue. But the company’s fastest growing business is its data networking business, which grew more than 50% sequentially in the quarter.

Tellabs saw increased sales to North American wireless customers and to international customers in the quarter. Revenue from outside the vendor’s home market grew 10% in the quarter to contribute more than a third of the company’s total revenue. In particular, orders in Latin America were up 70%, Tellabs said.

Feedback from customers around the globe suggests that carriers in developing countries are likely to keep spending flat in the near term while those in developed countries might cut spending by 5% or so, said Rob Pullen, Tellabs’chief executive officer. “Regardless of capex visibility, most customers are saying they’ll continue to invest in mobile backhaul, optical Ethernet and business services.”

Pullen also pointed out that Tellabs’ existing access products will remain active in carrier networks for many years to come, especially since they are deployed in the outside plant, where replacements take much longer than in the central office.

Added Wiggins: “Like a radiator, [Tellabs’ access portfolio] has a lot of heat and will continue to generate it for a long time.”