Tellabs 3Q Profit Surges 93%; 4Q Revenue Outlook Weak

Tellabs Inc.'s (TLAB) third-quarter profit surged 93% as the telecommunications-equipment maker reported higher transport and services revenue, as well as improved margins.

However, the company also forecast fourth-quarter revenue of $410 million to $430 million. Analysts polled by Thomson Reuters expected $442 million on average.

Tellabs has seen its results improve of late, helped by rising revenue from both its products and services. The company has focused on growth products and innovating in growth markets, such as mobile Internet. Last week, investment firm Auriga said it believed the company will likely enjoy at least two more quarters of upside related to 3G and 4G upgrades.

Tellabs posted a profit of $56.5 million, or 15 cents a share, up from $29.3 million, or 7 cents a share, a year earlier. Analysts most recently expected 14 cents.

Revenue increased 10% to $429.2 million. The company in July projected $425 million to $435 million, a view that topped analysts' then-estimates.

Gross margin jumped to 50.2% from 41.7% due to higher revenue from transport and data products, which carry above-average margins.

Revenue in Tellabs' broadband segment, its biggest, declined 3.4% while profit fell 2%. Its transport business saw revenue rise 33% while profit more than doubled.

Shares closed at $8.06 Monday and were inactive premarket. The stock is up 42% this year.

-By John Kell, Dow Jones Newswires; 212-416-2480;

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