Tuesday, April 27, 2010

Tellabs Q1 call - What UT should aspire to

As we head into another UT quarterly call, I recall previous ones and cringe at the lack of guidance and transparency that a public company is supposed to show. That was highlighted once again with the Tellabs call. Here is a link to the transcripts:


Granted, Tellabs' quarter is signficantly better than UT's previous quarters but the detail of information provided gives a shareholder a good feel for their business. Tellabs provided discussions on

1. Number of customers, trials, and info for specific products

"Revenue for all three data products Tellabs 8600, 8800, and 9100, increased both year-over-year and sequentially."

"During the quarter, 23 new customers placed orders for the Tellabs 8600 and 8800, primarily for Tellabs mobile backhaul solution, and this was done all over the world.

"We continue to work with customers and now increased number of trials to 18"

2. Gross margin discussions and influences
3. Guidance for next quarter/current year and how it has changed from their last discussion
4. Bookings

Analysts on the call? Look at their lineup...

Jim Suva – Citigroup
Vivek Arya – Banc of America/Merrill Lynch
Ehud Gelblum – Morgan Stanley
Nikos Theodosopoulos – UBS
Rod Hall – JP Morgan
Michael Genovese – Soleil - Elevate Research, Inc.
Jeff Kvaal – Barclays Capital
George Notter – Jefferies & Co.
Simon Leopold – Morgan, Keegan & Company, Inc.
Chandan Sarkar – Auriga U.S.A
Larry Harris – C.L. King & Associates, Inc.
Todd Koffman – Raymond James

As a shareholder, we obviously want info on bookings, guidance, customers, trials, margins, product performances, etc etc. While we get sporadic info from a product or segment, it is very inconsistent and does not portray a unified picture.

NGN - We get 4 or 5 customers from Latin America to Europe in one call and then nothing.
PDSN - We get 40% of a particular tender (China) in one call and then nothing.
GEPON - There were trials in 20 province (China) in one call and then nothing.
IPTV - No subscriber info provided in over a year.
PTN - Supposedely lots of trials but only a couple of wins. Almost the entire Tellabs call was devoted to the mobile internet and their transport/backhaul equipment. UT has major carriers/customers in China, India, and Japan and there is very little material/substantial information on their 700 series of products as it pertains to their customers/traction. Tellabs backhaul equipment is used in literally hundreds of customers (240, from the call). UTs PTN products can be used for aggregation of 3G/4G systems as well as legacy networks. It can be used for mobile backhaul. There are tons of technical literature in their website but as an investor, who cares if you don't read about it elsewhere or what traction it has gotten?

From all indications, the growth in iptv, mobile internet, broadband capacity is just ramping up and have years of tremendous growth ahead. Can UT participate? They seemed to have the products, more focus, new investors, raised capital but can they sell their products. So far, they have not and can't convince even analysts to show up for the calls! Analysts have been burned so bad so I don't blame them either. Yes, they have done a lot of the hard lifting. But, good operational results have yet to materialize. That makes it even more essential for the company to discuss more information. The company should atleast start building their credibility by being more transparent, wrapping up the legacy items that they have been discussing for over a year, and discussing the business in more detail.