KUHN CAPITAL Monday, March 19, 2018
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Tellabs Threatens Acquisitions

March 19

Reuters breathlessly reports that telecom equipment maker Tellabs -- with about $1 billion in cash -- is looking for acquistion opportunities amid the wreckage of its industry.

"Tellabs will be the one that consolidates others,'' CTO Antti Kankkunen is quoted as saying. "When the markets open up, we are ready to buy market shares and customers.... In world history, bad times are always followed by good times. This would be the first time if bad times would be followed by more bad times."'

He followed this statement by conceding that 2003 and 2004 will be challenging for Tellabs. In 2002, the company saw revenue declines of 40% while generating a net loss of $131 million.

Our guess is that we won't see material Tellabs acquisitions until the company's own financial performance has stabilized, or around the time that the industry as a whole demonstrates it has begun to rebound. Sure, good times follow bad, but bad times in telcom look like they'll last a good while longer.

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