Tellabs expects data business to continue to grow

NEW YORK—Communications equipment company Tellabs Inc. expects its data business to grow and after posting a disappointing second-quarter forecast last month says it "certainly has room to be encouraged" when it comes to improving its declining margins.

Speaking at the Merrill Lynch Technology Conference on Tuesday, Executive Vice President and Chief Financial Officer Tim Wiggins said the company's data business is growing significantly and its cost-savings plan is tracking "a little ahead of schedule."

Tellabs said in April it expects second-quarter sales of $425 million to $445 million, at the time well below analysts' expectations. Analysts have since lowered their estimates and, according to Thomson Financial, now expect sales of $434.6 million.

In the first quarter, adjusted gross profit margin was 39 percent, and in April the company forecast adjusted gross margin of 31 percent for the current quarter.

Wiggins said the company was disappointed with its second-quarter guidance and is focused on expanding its business.

Shares of Naperville, Ill.-based Tellabs climbed 12 cents, or 2.2 percent, to $5.52 in afternoon trading. The stock has traded between $4.92 and $13.67 in the past year.