Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Pal Levoni - Bank of America.
Vivek Arya - Bank of America
It’s Vivek Arya on Pal’s behalf. Rob for a long time you were somewhat hesitant to make acquisitions, but you recently acquired WiChorus for a significant premium. Has your view of organic growth of Tellabs changed in the last few weeks?
Rob Pullen
Well, first of all we think we paid a fair price for WiChorus and we hope to show our shareholders that we give them a very positive return on invested capital.
Next, no I’m optimistic about Tellabs’ future. This is just us being aggressive and expanding into an adjacency. Since I’ve taken over we’ve focused on re-owning our strategy which is focusing on mobile backhaul, optical networking, business service delivery and pro services. We as the management team wanted to stabilize our base as well as improve our fundamental operations, improve our profitability and return to shareholders, and we’ve told you what we are going to do, and we have done what we have said.
Having said that, I expect our growth portfolio is sound. In fact we are doing new extensions which could evolve into additional growth in 2010 to that growth portfolio. We are looking for growth out of the WiChorus SmartCore products and acquisitions, and we are hoping for better spend by our customers in next year as well; but no, I’m optimistic about Tellabs. This is us expanding into a normal adjacency that customers have been talking to us about over the past year or so anyway.
Vivek Arya - Bank of America
Secondly, if you look at one of the major Telco’s and the US AT&T, they expect to ramp their CapEx significantly in the fourth quarter, probably related to wireless and backhaul, but you are not seeing that in your fourth quarter expectations. I know it’s not a one-to-one correlation, but we would love to see how you think about wireless CapEx trends in the fourth quarter, and how they might impact your fourth quarter sales?
Rob Pullen
Well first of all, AT&T is a great customer and I don’t comment on specific customers CapEx trends. What I will share with you Vivek, is that AT&T’s spend is in our fourth quarter forecast, and as Tim said, we are guiding flat plus or minus two or three points. We see some very positive spend in certain customers, but in general we still see some caution when we look at our global base.
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