Tellabs CEO on capex growth: I’ll believe it when I see it

Though recent comments from major carriers suggest an improved spending environment going forward, Tellabs CEO Rob Pullen isn’t holding his breath.

His company, which announced its first-quarter earnings today, is projecting second-quarter growth to be between zero and a “high single-digit percentage,” though the back half of the year remains murky.

When asked by an analyst on today’s earnings call about the discrepancy between Tellabs’ cautious outlook and carrier spending comments, Pullen said, “I’ve heard a lot of talk through previous decades as well as this year — both up and down. And I’ll believe it when I come close to seeing it. And I’ll share it with you once we see it.”

Despite generating solid cash in the first quarter, Tellabs’ is still mostly a declining business. The company’s “growth products” contributed 39% of its revenue in the first quarter, up from 33% in the fourth quarter. Those growth products are likely to become the majority of Tellabs’ business next year, the company said, though in a best-case scenario, it could happen in this year’s fourth quarter.

When asked if Tellabs expects positive revenue growth in 2010, Pullen said, “If we keep on our current organic pace, yes.” Pullen also said during the call that the company was reviewing acquisition opportunities “as we speak,” though nothing is “imminent right now.”

Another analyst asked on today’s call if it would make more sense for Tellabs to be a privately held company. Chief Financial Officer Tim Wiggins replied: “Certainly we’ve thought about it. Being public, having that kind of solid balance sheet, is important to customers deciding which gear to put in their networks for a decade or more. If we were private, maybe we could invest significantly in a new platform that would have less impact on our current earnings, but the paradox is you don’t have the cash anymore because you used most of it to buy out your shareholders. There are trade-offs, obviously.”

Pullen added, “It would be a distraction.”

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