Tellabs up as company resumes buybacks
NEW YORK (AP) – Shares of Tellabs Inc. jumped Tuesday after the telecom equipment maker said it plans to buy back up to $200 million of its shares.
The company said Monday this represents about 8.6 percent of its shares as of Aug. 10.
The resumption of buybacks follows a "significant curtailment of stock repurchases since the fourth quarter of 2008, as the company evaluated uses of cash," Tellabs said.
Separately, Chairman Michael J. Birck plans to sell up to 3 million shares of Tellabs stock on the open market. Birck beneficially owns about 34.9 million shares and plans to use the proceeds from the sale to repay debt related to a family partnership.
Stock buybacks can increase companies' earnings per share because they result in fewer outstanding shares.
Lawrence M. Harris, an analyst with CL King & Associates, raised his 2010 earnings per share estimates to 30 cents from 28 cents. Analysts polled by Thomson Reuters expect a profit of 27 cents per share.
"Even after the $200 [million] share repurchase, Tellabs will still have a highly robust balance sheet," Harris wrote. He kept a "Neutral" rating.
Shares of Naperville, Ill.-based Tellabs reached a 52-week high of $6.38 in morning trading.