NAPERVILLE, Illinois, January 27 /PRNewswire/ --

- Company earns 3 cents per share in fourth quarter

Tellabs today reported fourth-quarter 2008 revenue of US$408 million, down 13% from US$469 million in the fourth quarter of 2007. For the year 2008, Tellabs revenue totaled US$1.7 billion, down 10% from US$1.9 billion in 2007.

On a GAAP basis, Tellabs earned 3 cents per share in the fourth quarter of 2008, up from 1 cent per share in the fourth quarter of 2007. GAAP earnings in the fourth quarter of 2008 were US$13 million, up 103% from US$6 million in the year-ago quarter. Fourth-quarter 2008 earnings were positively impacted by a tax benefit.

On a non-GAAP basis, Tellabs earned 9 cents per share in the fourth quarter of 2008, up from 4 cents per share in the fourth quarter of 2007. Non-GAAP earnings were US$35 million in the fourth quarter of 2008, up 102% from US$17 million in the fourth quarter of 2007. Non-GAAP results exclude pretax charges of US$39 million, including US$5 million or 0.8 cents per share in equity-based compensation expense.

For the year 2008 on a GAAP basis, Tellabs reported a loss of US$930 million or US$2.32 per share, compared with earnings of US$65 million or 15 cents per share for the year 2007. Tellabs' 2008 non-GAAP earnings were US$137 million or 34 cents per share, up 31% from US$104 million or 24 cents per share in 2007. Non-GAAP earnings exclude a previously announced US$988 million non-cash goodwill impairment charge, and other charges of US$101 million, including US$26 million or 4.4 cents per share in equity-based compensation.

Tellabs has successfully implemented its previously announced plan to increase gross profit margins and reduce operating expenses in order to achieve US$100 million in savings. GAAP gross margins rose to 41.6% in 2008 from 33.4% in 2007. Some of the improvement in non-GAAP gross profit margins, which rose to 38.5% in 2008 from 35.5% in 2007, resulted from the US$100 million savings plan. Going forward, Tellabs 2009 non-GAAP quarterly operating expenses are expected to be lower than in 2008.

Customers continued to choose Tellabs this quarter. BT placed orders for the Tellabs 8600 system, marking our 96th customer for this product. A new cable TV multiple system operator (MSO) customer selected Tellabs 7100 system for optical networking, said Rob Pullen, Tellabs president and chief executive officer. In these tough times, Tellabs is focused on improving profitability -- both for our customers and for our company -- and investing for the future to emerge stronger after the downturn. We help customers succeed by enabling new service revenue, reducing capital expenses and cutting operating expenses.

Broadband -- Fourth-quarter 2008 revenue from the broadband segment totaled US$227 million, down 17% from US$274 million in the fourth quarter of 2007. Full-year 2008 revenue from the broadband segment was US$920 million, down 10% from US$1,018 million in 2007. Within the broadband segment, for the fourth quarter of 2008:

-- Data revenue was US$60 million, up 49% from US$40 million in the year-ago quarter.

-- Access revenue was US$98 million, down 36% from US$154 million in the year-ago quarter.

-- Managed access revenue was US$69 million, down 14% from US$80 million in the year-ago quarter.

Transport -- Fourth-quarter 2008 revenue from the transport segment totaled US$124 million, down 9% from US$136 million in the fourth quarter of 2007. Full-year 2008 revenue from the transport segment was US$580 million, down 14% from US$673 million in 2007.

Services -- Fourth-quarter 2008 services revenue was US$57 million, down 3% from US$59 million in the fourth quarter of 2007. Full-year 2008 revenue from the services segment was US$229 million, up 3% from US$222 million in 2007.

First-Quarter 2009 Guidance -- The following statements are forward-looking statements that are based on current expectations and involve risks and uncertainties, some of which are set forth below. Tellabs expects current market conditions to continue. We expect first-quarter 2009 revenue to be in the US$345 million to US$375 million range. First-quarter 2009 non-GAAP gross margin is expected to be flat, plus or minus a point or two, depending on product mix, compared with the fourth quarter of 2008; non-GAAP gross margin excludes about US$1 million in equity-based compensation expense. First-quarter 2009 non-GAAP operating expense is expected to be flat to slightly down from the fourth quarter of 2008. Non-GAAP operating expense excludes about US$10 million in equity-based compensation expense and amortization of purchased intangibles.

Share Repurchase -- Under previously announced share repurchase plans, Tellabs repurchased 2.7 million shares for US$10.3 million during the fourth quarter of 2008.

Simultaneous Webcast and Teleconference Replay -- Tellabs will host an investor teleconference at 7:30 a.m. Central Standard Time today to discuss its fourth-quarter results and provide its outlook for the first quarter of 2009. Internet users can hear a simultaneous webcast of the teleconference at http://www.tellabs.com; click on the webcast icon. A taped replay of the call will be available beginning at approximately 10:30 a.m. Central Standard Time today, until 10:30 p.m. Central Standard Time on Thursday, Jan. 29, at +1-800-642-1687. (Outside the United States, call +1-706-645-9291.) When prompted, enter the Tellabs conference ID number: 80042726. A podcast of the call will be available at http://www.tellabs.com/news/feeds/ later today.

About Tellabs -- Tellabs advances telecommunications networks to meet the evolving needs of users. Solutions from Tellabs enable service providers to deliver high-quality voice, video and data services over wireline and wireless networks around the world. Tellabs (NASDAQ: TLAB) is part of the NASDAQ Global Select Market, Ocean Tomo 300(TM) Patent Index, the SP 500 and several corporate responsibility indexes including FTSE4Good and eight KLD indexes. http://www.tellabs.com

Forward-Looking Statements -- This news release, which includes the results of operations discussion that follows, contains forward-looking statements, including but not limited to the first quarter 2009 guidance and cost savings information contained in this release, that involve risks and uncertainties. Actual results may differ from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, risks associated with: the competitive landscape, including pricing and margin pressures, the response of customers and competitors, industry consolidation, the introduction of new products, the entrance into new markets, the ability to secure necessary resources, the ability to realize anticipated savings under our cost-reduction initiatives, and overall negative economic conditions generally and disruptions in credit and capital markets, including specific impacts of these conditions on the telecommunications industry. In light of these factors investors are advised not to rely on forward looking statements in deciding whether to buy, sell or hold the company's securities. The company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after today or to reflect the occurrence of unanticipated events. For a more detailed description of the risk factors, please refer to the company's SEC filings.

Tellabs and Tellabs logo are registered U.S. trademarks of Tellabs Operations, Inc. in the United States and/or in other countries. Any other company or product names mentioned herein may be trademarks of their respective companies.

Media, George Stenitzer, +1-630-798-3800, george.stenitzer@tellabs.com, or Investors, Tom Scottino, +1-630-798-3602, tom.scottino@tellabs.com, both of Tellabs; NOTE TO EDITORS: The complete text of this release is available at http://www.tellabs.com/news/2009/4q08.pdf