CS First Boston analyst James Parmelee says that he sees significant risk to his near term sales estimates for Tellabs (TLAB ) based upon a lengthened time to work down Titan 5500 inventories. The analyst said that with the timing of the recovery less clear, his near term sales estimates of $780 million for the second quarter and $890 million for the third quarter may need to be reduced.
The inventory workdowns are a function of redeployment of CLEC interconnections and the desire by ILECs to carry reduced inventory balances, Parmeless says. He notes that the implication is the risk to his high-single-digit top line growth rate estimate for the second half of 2001 for this product platform. Though he maintains a buy rating on Tellabs shares, notes that there is increased probability of additional downside to the stock in the short term.