Tellabs reports reduced loss in second quarter on lower revenues /Vitesse offers SynchroPHY for mobile network timing

Tellabs’ (NASDAQ: TLAB) report of its second quarter 2012 performance showed progress or regression, depending on your perspective. On the negative side, the company saw revenues of $288 million, a decline from the $317 million it earned in the same quarter of 2011. However, while it suffered a GAAP net loss of $29 million (8 cents a share) in the second quarter of 2011, Tellabs said its net loss in this year’s second quarter was $5 million (1 cent per share).

Looking at things from a non-GAAP viewpoint, Tellabs actually saw net earnings of $6 million (2 cents per share) in the quarter, a marked improvement over the net loss of $14 million (4 cents per share) at the same time last year. The non-GAAP results for this year’s quarter exclude pretax charges of $6.9 million, including $5.0 million in equity-based compensation expense, $1.0 million in intangible asset amortization, and $0.9 million in restructuring and other charges.

“In the second quarter, Tellabs grew revenue sequentially by 12%, generated $32 million in cash from operations, and improved margins and profitability,” said Dan Kelly, Tellabs acting CEO and president, via a press release. “We won new business and delivered major product releases. While we see a challenging economic and industry environment ahead, our goals are to help customers succeed and to improve Tellabs’ profitability.”

Tellabs’ GAAP gross profit margin was 39.6% in the second quarter of 2012, up from 36.4% in the year-ago quarter.

The company also announced that it would reorganize its performance statements around new business segments that would reflect its new emphasis on packet-optical network and mobile backhaul applications. The new segments are:

    Optical: This segment includes the Tellabs 7000 series of optical transport systems, as well as the Tellabs 5000 and 6300 series of transport systems equipped with optical interfaces.
    Data: This segment includes systems targeted at mobile backhaul, as well as provision of business services and edge routing applications. Products include the packet-switched Tellabs 8600 Managed Edge System, the Tellabs 8800 Multiservice Router Series, and Tellabs 9200 Content-Aware Router Series, as well as the Tellabs 8100 Managed Access System.
    Access: These products include those aimed at fiber to the home (FTTH) and optical LAN applications. The segment comprises the Tellabs 1000 and 1100 Multi-service Access systems and the Tellabs 1600 Optical Network Terminals.
    Services: This segment includes network planning, building, and operations services for deployment, support, training, and other professional services in support of the other segments.

For the recently completed quarter, the Optical segment generated $122 million in revenue, the Data segment $78 million, the Access segment $37 million, and the Services segment $51 million.

Looking ahead to the third quarter, the company expects revenues in the range of $260 million to $290 million. The ongoing macroeconomic uncertainties in Europe and other parts of the world were cited for the conservative guidance, which also included non-GAAP gross margin of around 40%.

Vitesse Semiconductor Corp. (NASDAQ: VTSS) has introduced its SynchroPHY family of 1 Gigabit Ethernet (GbE), 10GbE, and 10GbE Optical Transport Network (OTN) PHYs. The chips leverage Vitesse’s VeriTime technology to support timing requirements in Ethernet, microwave, and OTN applications, including mobile backhaul.

The family includes:

    VSC8572/VSC8574 Dual/Quad GbE PHYs
    VSC8487-15/VSC8488-15 Single/Dual 10GbE PHYs
    VSC8492/VSC8494 Dual/Quad Universal (10GbE or OTN) or 10GbE-only PHYs

The VeriTime technology offers the most accurate implementation of the IEEE1588v2 timing protocol in the industry, Vitesse asserts. The company has reported better than 3-ns per hop accuracy over a nine-hop IEEE1588v2 Transparent Clock (TC) network. Such performance makes VeriTime-enabled devices the only ones to fulfill TD-LTE and LTE-Advanced requirements in real-world tests, Vitesse claims.

In addition to new designs, Vitesse is targeting system upgrades, in which designers would improve the timing accuracy of their systems by replacing existing PHYs with SynchroPHY devices.

“Our SynchroPHY family enables sub-10-ns accurate timing through a simple upgrade of PHYs in existing routers and switches,” said Richard Interrante, product marketing director at Vitesse. “With Vitesse’s unique architectural approach, VeriTime-enabled solutions achieve the in-line speed and scalability crucial to the functionality of 4G service provider networks.”