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Tellabs, Inc. - Global Telecom Solutions Provider

Established in 1975, Tellabs provides telecommunications network solutions for voice, data, and video transport. With a focus on transport, switching/routing, and network access, Tellabs helps service providers offer new services and reach more customers.

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Tellabs, Inc. - Global Telecom Solutions Provider

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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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