Tellabs Pares Spending, Work Force


Citing a capital-spending slowdown that has deeply impacted companies such as
ADC Telecommunications Inc. and Lucent Technologies, broadband-equipment company
Tellabs Inc. said it will lay off about 6 percent of its work force and drop its
line of 'SALIX' next-generation switching products.

More specifically, Tellabs said, it will lay off about 550 employees,
eliminate 450 temporary positions and leave about 1,100 open positions unfilled
this year, resulting in a total charge of between $150 million and $225 million.
The company also plans to eliminate salary raises this year and institute a pay
cut for corporate officers.

Tellabs said those moves will curtail annual company spending by about 5
percent to 6 percent.

Despite those cost-cutting measures, Tellabs, driven by its core
optical-networking products, posted first-quarter sales of $772 million, up 21
percent from the year-ago quarter, and recorded diluted earnings per share of 29
cents, up 12 percent from last year.

Tellabs said paring back on its next-generation switching efforts will allow
it to focus on higher-growth areas such as optical networking.

Tellabs' broadband-access-equipment sales in the first quarter, at $153
million, were offset by slower sales of its 'CABLESPAN' product line, the
company said.

Earlier this year, Tellabs closed its $181 million acquisition of Future
Networks Inc., a move designed to flesh out its voice-over-Internet-protocol
product portfolio.