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Excerpt from our One Page Barron's Summary (receive it by email every week by signing up here):

Long-Distance Winner By Jacqueline Doherty

Highlighted companies: Tellabs (NASDAQ:TLAB)
Summary: Tellabs stock fell sharply following earnings last week when the telecom infrastructure company gave disappointing revenue guidance for Q4. But with products in two high-growth areas and a very reasonable valuation, bulls have a strong case to make. Tellabs trades at 17x next year's earnings - cheap by comparison to the 25x earnings Cisco recently paid for Scientific Atlanta. The revenue outlook pegged y-o-y growth of only 1-5%, but last year's figures were inflated due to BellSouth's post-Hurricane Katrina purchases. Tellabs' 5500 connects traffic between carriers and different types of networks (land, cable, wireless) and is threatened by the move to IP networks, but for the time being it's a cash cow with 40+% margins. Current question marks: (1) International growth and (2) Verizon's move to next-generation, GPON equipment for FTTH with competitor Alcatel as lead supplier. Barron's nonetheless concludes that 'the next three years look bright. The shares could climb more than 40% over that span.'
Related: Andrew Schmitt concurs with the Tellabs CEO that Verizon's move to GPON isn't happening as fast as analysts predict • Tellabs Q3 2006 Earnings Call Transcript

Source: Barron's: Next Three Years Look Bright for Tellabs