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Tellabs, Inc.

Tellabs, Inc. Finance 295 Chris Brobst K. Brett McNeely. History of Tellabs. Established in 1975, publicly owned in 1980 Nearly 7,000 employees in 60 locations worldwide Listed on NASDAQ as TLAB CEO, President, and Director is Michael Birck since 1975.

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Tellabs, Inc.

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  1. Tellabs, Inc. Finance 295 Chris Brobst K. Brett McNeely

  2. History of Tellabs • Established in 1975, publicly owned in 1980 • Nearly 7,000 employees in 60 locations worldwide • Listed on NASDAQ as TLAB • CEO, President, and Director is Michael Birck since 1975. • Stock price as of 1 pm – 55 1/8 down 2 1/16

  3. TLAB – Corporate Information • Provides telecommunication network solutions for voice, data, and video transport • Customers range from cable operators and wireless service providers to local and long-distance carriers and alternate service providers • Focus on transport, switching/routing, network access and service-quality enhancement solutions

  4. GBLX –Corporate Information • Telecommunications service provider – long distance/internet • Creating worldwide network – no switching or rerouting • Using digital fiber optic cable • Successfully implemented network on all 6 inhabited continents

  5. Client’s Holdings/Recent News • Bill came to own GBLX through Frontier Communications • Frontier bought Bill’s family owned company • Earnings annc. Feb. 18th , $ -.24, estimates were $ -.22 • Stock price dropped 8 11/16 Friday; 48 at 1 pm • Announced acquisition of IPC Telecom/IXNet subsidiary

  6. Tellabs Vision • To become a global solutions provider that is resourceful, candid and sure in helping service providers be successful • To help service providers build and manage the new public network • To help service providers offer new services and reach more customers

  7. Tellab’s Products & Services • Transport Solutions Services - TITAN/FOCUS Optical networking systems, help prepare firms for broadband – multiple bandwidths on the same network • Managed Access and Service Delivery Systems – actual network creation • Switching/Routing Platforms - AN2100 Gateway Exchange – transfer info over a single network, helps customers cut costs • Voice Quality and Service Enhancement Solutions

  8. Recent News • Surpassed sales goal of $2 billion by $300 million. • Exceeded Q4:1999 estimates by $.01/shr • Business Week Magazine/Investor’s Business Daily - one of the best-performing stocks of the S&P, 3-year return of 240% • Lowered estimates 1Q:2000 $.34/$.30, still expects to meet FY2000 EPS – share price dropped 11 3/16 following news

  9. Tellabs, Inc. Vs. Competition

  10. Tellabs Vs. Industry/Sector/S&P

  11. Income Statement – 1996-1998

  12. Projection Assumptions • 24% Sales Growth/ Opposed to 39% (3 year avg) • CGS 34% of Sales • Operating Expenses 33% of Sales • Tax Bracket Change from 31.5% to 33.5% • Contraction of P/E ratio from current 40 to 32 • Outstanding Shares – 401,807,000 • Diluted Shares – 413,323,000

  13. Conclusion • This conservative model projects a 13.35% annual gain over the next 4 years • Half again as much as the historical return of the S&P 500 • Recommend buying 400 shares at the market

  14. Income Statement – 1999-2003

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