Tellabs Reports First-Quarter 2009 Revenue of US$362 Million

NAPERVILLE, Illinois - Company improving gross profit margins, generating cash and investing in the future

Tellabs’ first-quarter 2009 revenue totaled US$362 million, compared with US$464 million in the first quarter of 2008.

Tellabs earned US$7 million or 2 cents per share on a GAAP (U.S. generally accepted accounting principles) basis, compared with US$17 million or 4 cents per share in the year-ago quarter.

On a non-GAAP basis, Tellabs earned US$22 million or 6 cents per share, compared with US$32 million or 8 cents per share in the year-ago quarter. Non-GAAP results exclude pretax charges of US$18 million, which includes US$5 million or 0.9 cents per share in equity-based compensation expense.

GAAP gross profit margins were 44.2% in the first quarter of 2009, higher than in any quarter since the third quarter of 2006. The company generated US$44 million in cash from operations and increased its cash and cash equivalents to US$1.18 billion. Tellabs continues to invest in the future: research and development spending amounted to 19% of revenue in the quarter.

“Tellabs continues to focus on improving profitability - both our customers’ and our own - by helping customers generate new revenues, reduce capital expenses and cut operating expenses,” said Rob Pullen, Tellabs president and chief executive officer. “During the first quarter, we gained new customers for our innovative growth products, including our dynamic optical networking and data products. Data products continue to be our fastest-growing product category: first-quarter data revenue grew 45% compared with the year-ago quarter. We are successfully transitioning to growth products while improving gross profit margins, generating cash and investing in the future.”

For the first quarter of 2009, broadband segment revenue was US$178 million, transport segment revenue was US$130 million and services segment revenue was US$54 million. More detailed information, including year-over-year segment comparisons, can be found in the Results of Operations section of this news release.

Second-Quarter 2009 Guidance - The following statements are based on current expectations and involve risks and uncertainties, some of which are set forth below. Compared with the first quarter of 2009, Tellabs expects second-quarter revenue to be flat to up by a high-single-digit percentage. Non-GAAP gross margin is expected to be flat, plus or minus a point or two, as a result of product mix. Non-GAAP operating expense is expected to continue on a downward trajectory in the second quarter. Non-GAAP gross margin excludes about US$1 million, and non-GAAP operating expense excludes about US$5 million, in equity-based compensation expense.

Simultaneous Webcast and Teleconference Replay - Tellabs will host an investor teleconference at 7:30 a.m. Central Daylight Time today to discuss its first-quarter 2009 results and provide its outlook for the second quarter of 2009. Internet users can hear a simultaneous webcast of the teleconference at www.tellabs.com; click on the webcast icon. A taped replay of the call will be available beginning at approximately 10:30 a.m. Central Daylight Time today, until midnight Central Daylight Time on Thursday, April 30, at +1-800-642-1687. (Outside the United States, call +1-706-645-9291.) When prompted, enter the Tellabs conference ID number: 94429696. A podcast of the call will be available at www.tellabs.com/news/feeds/ later today.

About Tellabs - Tellabs helps customers succeed through innovation. That’s why 41 of the top 50 global telecom service providers choose our mobile backhaul, optical networking and business services solutions. We help telecom service providers, independent operating companies, MSO/cable TV companies, enterprises and government agencies get ahead by adding revenue, reducing expenses and optimizing networks. With wireless and wireline networks in more than 90 countries, we enrich people’s lives by innovating the way the world connects(TM). Tellabs (Nasdaq: TLAB) is part of the NASDAQ Global Select Market, Ocean Tomo 300(TM) Patent Index, the S&P 500 and several corporate responsibility indexes including FTSE4Good and eight KLD indexes. www.tellabs.com

Forward-Looking Statements - This news release, which includes the Results of Operations discussion that follows, contains forward-looking statements, including but not limited to the second-quarter 2009 guidance and cost savings 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 response of customers and competitors, industry consolidation, the introduction of new products, the entrance into new markets, the ability to secure necessary resources, the ability to realize anticipated savings under our cost-reduction initiatives, and overall negative economic conditions generally and disruptions in credit and capital markets, including specific impacts of these conditions on the telecommunications industry. In light of these factors investors are advised not to rely on forward-looking statements in deciding whether to buy, sell or hold the company’s securities. 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.

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.

Source: Tellabs

MEDIA, George Stenitzer, +1-630-798-3800, george.stenitzer at tellabs.com; or INVESTORS, Tom Scottino, +1-630-798-3602, tom.scottino at tellabs.com, both of Tellabs / NOTE TO EDITORS: The complete text of this release is available at www.tellabs.com/news/2009/1q09.pdf