Shares of Tellabs Inc. jumped 9.7 percent after the company reported higher-than-expected fourth quarter earnings and said profit margins would maintain their current level, even though a harsh economy has led to a slowing of spending on telecommunications equipment by phone companies.

The Naperville-based company, which supplies voice, data and video systems, doubled its net income to $12.8 million, or 3 cents per diluted share, including a tax benefit, in the period ended Jan. 2, compared with a profit of $6.3 million, or one cent per diluted share, in the same period a year ago. Before one-time items, its earnings per diluted share were 8 cents compared with the average analysts' estimate of 5 cents compiled by Reuters Estimates.

Sales decreased 13 percent to $408.3 million from $469.1 million in the quarter. Analysts on average estimated first quarter revenue at $386.6 million.

“In these tough times, Tellabs is focused on improving profitability, both for our customers and for our company, and investing for the future to emerge stronger after the downturn,” stated CEO Rob Pullen in a press release. “We help our customers succeed by enabling new service revenue, reducing capital expenses, and cutting operating expenses.”

Tellabs spokesman George Stenitzer said that the company can improve profitability by helping its customers improve their profitability.

He said that the spending decisions of companies such as Verizon Communications Inc., AT&T Inc. and other phone companies will have the biggest impact on Tellabs.

CL King & Associates analyst Lawrence Harris said in a report that investors were relieved the company expects a continuation of better-than-expected profit margins even though its revenue forecast for the current quarter was well below expectations.

Expecting current market conditions to continue, Tellabs forecasted first quarter revenue of $345 million to $375 million. In the year-earlier quarter Tellabs booked revenue of $469 million.

For the year 2008, Tellabs reported a loss of $930 million, or $2.32 per diluted share, compared with earnings of $65 million, or 15 cents per share for the year 2007.  Revenue totaled $1.7 billion, down 10 percent from $1.9 billion in 2007.

Tellabs stock closed at $4.42, up 39 cents.