NAPERVILLE, Illinois, January 22 /PRNewswire/ --

- Announces plan to reduce annual costs and operating expenses by US$100 million

Tellabs reported fourth-quarter 2007 revenue of US$469 million, up 3% from US$455 million in the fourth quarter of 2006. For the year 2007, Tellabs revenue totaled US$1.9 billion, down 6% from US$2.0 billion in 2006.

Tellabs earned US$6 million or 1 cent per share in the fourth quarter of 2007 on a GAAP basis, down 78% from US$29 million or 7 cents per share in the fourth quarter of 2006. On a non-GAAP basis, Tellabs earned US$17 million or 4 cents per share, down 63% from US$47 million or 10 cents per share in the fourth quarter of 2006. Non-GAAP results exclude pretax charges of US$15 million for special items, including US$8 million or 1.3 cents per share in equity-based compensation expense.

For the year 2007, Tellabs earned US$65 million or 15 cents per share on a GAAP basis, down 67% from US$194 million or 43 cents per share for the year 2006. Tellabs' 2007 non-GAAP earnings were US$104 million or 24 cents per share, down 60% from US$258 million or 57 cents per share in 2006. Non-GAAP earnings exclude pretax charges of US$60 million for special items, including US$31 million or 4.6 cents per share in equity-based compensation expense.

To improve profitability, Tellabs is implementing a plan to increase gross profit margins and reduce operating expenses. Under this plan, together with the restructuring announced in September 2007, Tellabs expects to achieve US$100 million in savings by the end of 2008. Reductions include US$75 million from annual operating expenses and US$25 million from overhead costs of products and services. Included in the US$100 million plan are future workforce reductions of approximately 225 employees, in addition to 125 employees who were affected by the September restructuring. Under this plan, Tellabs will take charges of US$12 million to US$14 million during 2008, including approximately US$8 million in the first quarter of 2008.

"Last year, nearly half of Tellabs revenue came from new products added since 2003," said Krish A. Prabhu, Tellabs president and chief executive officer. "Gross profit margins are trending up, and Tellabs' plan will reduce annual costs and operating expenses by US$100 million. Unfortunately, implementation of the plan will impact Tellabs' workforce."

Broadband -- Fourth-quarter 2007 revenue from the broadband segment totaled US$274 million, up 10% from US$249 million in the fourth quarter of 2006. Full-year 2007 revenue from the broadband segment was US$1,018 million, down 6% from US$1,080 million in 2006. Within the broadband segment, for the fourth quarter of 2007:

-- Data revenue was US$40 million, up 29% from US$31 million in the fourth quarter of 2006. -- Access revenue grew 12% to US$154 million from US$138 million in the fourth quarter of 2006. -- Managed access revenue of US$80 million was flat with US$80 million in the fourth quarter of 2006.

Transport -- Fourth-quarter 2007 revenue from the transport segment totaled US$136 million, down 14% from US$159 million in the fourth quarter of 2006. Full-year 2007 revenue from the transport segment was US$673 million, down 14% from US$778 million in 2006.

Services -- Fourth-quarter 2007 services revenue was US$59 million, up 26% from US$47 million in the fourth quarter of 2006. Full-year 2007 revenue from the services segment was US$222 million, up 22% from US$183 million in 2006.

First-Quarter 2008 Guidance -- The following statements are forward-looking statements that are based on current expectations and involve risks and uncertainties, some of which are set forth below. Tellabs expects current market conditions to continue. Based on normal fourth-quarter to first-quarter seasonality, we expect first-quarter 2008 revenue to be in the mid-US$450 million range, plus or minus. First-quarter 2008 non-GAAP gross margin is expected to be 37%, plus or minus; non-GAAP gross margin excludes about US$2 million in equity-based compensation expense. First-quarter 2008 non-GAAP operating expense is expected to be flat to slightly down from the fourth quarter. We expect the expense decline to accelerate in the second half of 2008 as we generate improvements from our US$100 million plan. Non-GAAP operating expense excludes about US$12 million in equity-based compensation expense and amortization of purchased intangibles.

Share Repurchase -- Under previously announced share repurchase plans, Tellabs repurchased 20.6 million shares for US$147 million during the fourth quarter of 2007. In the year 2007, Tellabs repurchased 25.1 million shares for US$195.9 million.

Simultaneous Webcast and Teleconference Replay -- Tellabs hosted an investor teleconference to discuss its fourth-quarter results and provided its outlook for the first quarter of 2008. A taped replay of the call is available until 10:30 p.m. U.S. Central Standard Time on Thursday, Jan. 24, at +l-706-645-9291. When prompted, enter the Tellabs conference ID number: 29919350. A podcast of the call will be available at http://www.tellabs.com/news/feeds/.

Tellabs advances telecommunications networks to meet the evolving needs of users. Solutions from Tellabs enable service providers to deliver high-quality voice, video and data services over wireline and wireless networks around the world. Ranked among the BusinessWeek InfoTech 100, Tellabs (Nasdaq: TLAB) is part of the NASDAQ-100 Index, NASDAQ Global Select Market and the S&P 500. http://www.tellabs.com

Forward-Looking Statements -- This news release contains forward-looking statements, including but not limited to the guidance information contained in this release that involve risks and uncertainties. Actual results may differ from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, risks associated with: the competitive landscape, including pricing and margin pressures, the introduction of new products, the entrance into new markets, the ability to secure necessary resources, the response of customers and competitors, industry consolidation and the economic changes generally impacting the telecommunications industry. The company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after today or to reflect the occurrence of unanticipated events. For a more detailed description of the risk factors, please refer to the company's SEC filings.

Tellabs(R) and Tellabs logo(R) are trademarks of Tellabs or its affiliates in the United States and/or other countries. Any other company or product names mentioned herein may be trademarks of their respective companies.

Web site: http://www.tellabs.com

media, George Stenitzer, +1-630-798-3800, george.stenitzer@tellabs.com, or Tom Scottino, +1-630-798-3602, tom.scottino@tellabs.com, both of Tellabs / NOTE TO EDITORS: The complete text of this release is available at http://www.tellabs.com/news/2007/4q07.pdf