Tellabs Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tellabs (Nasdaq: TLAB  ) fell more than 20% after it reported disappointing fourth-quarter results and warned that first-quarter sales would fall below Street expectations.

So what: Tellabs, which competes with the likes of Alcatel-Lucent (NYSE: ALU  ) and Cisco (Nasdaq: CSCO  ) in the market for telecommunications equipment, turned last year's $0.16 profit into a $0.03 loss in Q4. Revenue also came in light at $410 million. Analysts were expecting $418.4 million, Reuters reports.

Now what: Rarely will you find me siding with the mouth foamers, but in the case of Tellabs I see good reasons for today's selling. Telecom equipment is a sensitive business that depends on the largesse of carriers fighting for a big bucket of low-margin profits. If Tellabs can't make good now -- in the golden age of smartphones, tablets, and IP telephony -- why should anyone believe it will make good when these high-growth markets mature?

Interested in more info on Tellabs? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is at least 10% better than other disclosure policies.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1428637, ~/Articles/ArticleHandler.aspx, 11/28/2014 7:24:57 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement