Tough times, but hope, for Tellabs
Tellabs to lay off 800, shut down overseas plant
 
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For vendors in the telecom industry, the bottom seems to get farther away just as it seems near.
The latest to recognize this is Tellabs, which is laying off 800 more employees after cutting about 3,200 over the past two years. It is also closing the doors on its plant in Shannon, Ireland because it doesn't have enough orders to keep the facility busy.
"As you know, our customer's capital spending has still not stabilized. We honestly don't know when or where it will stabilize. What we do know is that current expenses are well above the level that our current sales can sustain," Tellabs President and CEO Mike Birck said.
This is a dire statement from a well-established vendor to the telecom industry, focusing on its dense wave division multiplexing optical gear. But this cutting-edge equipment is just the type of gear that carriers are putting off purchasing until their economic picture improves.
The financial firm Merrill Lynch doesn't find fault with Tellabs itself for its plight. "We believe the primary cause remains North American carrier spending constraints and not competition or price pressures," the firm says in a report.
Merrill Lynch also paints Tellabs' problem in the starkest light, feeling the need to state it thinks the company will not go out of business. "Although we see Tellabs as a survivor given its imbedded base, strong balance sheet and product portfolio, 2003 is likely to be another challenging year…" the report says.
This harrowing time stretching out for yet another year, with Tellabs already facing a projected loss for the year, means some vendors won't survive. Those that are still kicking now must continue to take drastic measures.
In making the painful decision to lay off yet more workers, Birck tries to deal honestly with his employees.
"When a recovery eventually begins, I expect it to be so gradual that it will be hard to discern that it's begun, at least for a while," Birck says in a memo to his employees. "At some point, I expect the industry to return to its normal growth pattern, growing in the low single digits, perhaps a little faster than the overall economy. I know we all look forward to that day."
Amen to that.
RELATED LINKS
In another round of layoffs at Tellabs, 800 lose jobs
Bandwidth management equipment vendor Tellabs is laying off another 800 workers, including 400 in the U.S. and 400 in Ireland, as it again trims costs to cope with continuing sales declines in a tough IT marketplace. Computerworld, 09/05/02.
Tellabs to cut 1,200 more
Telecom equipment maker Tellabs is laying off 1,200 more employees and closing another plant in an effort to cut expenses as its first quarter revenue dipped $99 million from the previous quarter, most of it attributable to declining sales of its optical gear. Network World, 04/18/02.
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