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November 30, 2005

Securities and Exchange Commission

450 Fifth Street, NW

Washington, D.C. 20549

  Attention:

  Mr. Larry Spirgel

  Ms. Kathryn Jacobsen

  Re:

  Tellabs, Inc.

  Form 10-K for Fiscal Year Ended
  December 31, 2004

  Filed March 15, 2005

  File No. 0-9692

Ladies and Gentlemen:

We are writing in response to the comments contained in the Staff’s
comment letter dated October 19, 2005, (the “Comment Letter”) with respect
to Tellabs’ Form 10-K for the fiscal year ended December 31, 2004, as
filed on March 15, 2005.

For the convenience of the Staff’s review, we have set forth the
comments contained in the Staff’s Comment Letter along with our responses.

Tellabs, Inc.

Form 10-K
for Fiscal Year Ended December 31, 2004

Exhibit 13:  Tellabs’ 2004 Annual Report

Critical Accounting Policies

Goodwill, page 23

Comment:

1.               We note your
statement that you manage your business in one operating segment.  However, your disclosure on page 54
indicates that you may have more than one operating segment based on business components
managed by certain of your Executive Vice Presidents.  Specifically, we refer to your Access
Products, Broadband Networking Products and Core Products which are managed by
Executive Vice Presidents who, according to your web site, have profit and loss
responsibilities.  Please tell us in
detail how you:

a.               Concluded that you
have only one reportable segment.  Refer
to paragraphs 10 and 17 of SFAS 131 in your response.

b.              Determined your
reporting units.  Refer to paragraph 30
of SFAS 142 and EITF D-101 in your response.

Response:

What Tellabs Does

Tellabs designs, develops and markets products and services used by
telecommunications companies in their networks to deliver telecommunications
services efficiently and effectively. We do not attempt to compete in all areas
of our customers’ networks, which are vast and complex. Rather, Tellabs focuses
on products that serve only a portion of their networks.  Tellabs has historically treated its business
as a single segment.  Acquisitions have
been, and continue to be treated as add-on products used to fill strategic
business needs of our customers and are integrated into our company as such.

Structure of Tellabs Internal Organization

Tellabs’ internal organization is currently structured around eight
executive vice president (EVP) positions that report directly to the president
and CEO (chief operating decision maker and the executive with profit and loss
responsibility). While this structure differs from the organizational structure
that existed during 2004 and from the structure previously shown on our website
that you referenced in your comment, the underpinnings of our business have not
changed. Over the last three years, Tellabs has modified its internal
organization structure several times, including the changes in the alignment of
responsibilities described in our annual report. Given the size and scope of
our company and the demands placed on our senior management team, we frequently
adjust our internal organization to most efficiently manage our business. The
changes are not driven by the presence of distinct businesses, but instead by
an intent to ensure that the business is consistently managed on a consolidated
basis. Our ability to realign titles, positions and responsibilities in an
effort to more effectively run our business is possible because we operate in
one segment..

The following summarizes the responsibilities of the current eight EVP
positions:

1.               EVP Global Sales
and Service – This position is responsible for our company’s global sales
activities including generating sales for each of Tellabs products and
services. All sales personnel wherever located are managed by and report
through this position. In addition to being responsible for our company’s
global sales force, this position is responsible for selling and delivering
services to our customers that support and enhance each of our company’s
products, all customer proposals and contract negotiations. All services
personnel wherever located are managed by and report through this position.

2.               EVP Global
Operations – This position is responsible for our company’s global supply chain.  It is responsible for the procurement,
manufacturing and distribution of all products marketed by Tellabs including the
management of our manufacturing outsourcers and ensuring an adequate and timely
supply of products for orders.  All
supply chain personnel wherever located are managed by and report through this
position.

3.               EVP Transport
Products - This position is responsible for research and development and
product line management for our transport products.  This position manages the day-to-day
activities of these products within company-wide parameters established by our
CEO and executive team that include revenue, margin and research and
development expense targets.

4.               EVP Broadband
Products – This position is responsible for research and development and
product line management for our fiber access and data products (recently
combined as the broadband products group).
This position manages the day-to-day activities of these products within
company-wide parameters established by our CEO and executive team that include
revenue, margin and research and development expense targets.

2

5.               EVP, Corporate
Strategy and Chief Technology Officer – This position is responsible on a
global basis for technology strategy and business development.  This position is also responsible world-wide
for long-range marketing and marketing communications.  Most technology and strategy personnel
wherever located are managed by and report through this position.

6.               EVP, General
Counsel and Chief Administrative Officer – This position is responsible on a
global basis for the legal organization, corporate compliance, corporate communications
and corporate secretarial functions.
This position is also responsible for all aspects of human resources
including facilities. All legal, human resources, facilities and corporate
communication personnel wherever located are managed by and report through this
position.

7.               EVP and Chief
Financial Officer – This position is responsible for leading all aspects of
global finance services, including accounting, treasury, audit, financial
planning and analysis, risk management, investor relations and overall expense
control. All finance personnel wherever located are managed by and report
through this position.

8.               EVP and Chief
Information Officer – This position is responsible on a global basis for developing
and maintaining our business information systems. All information technology
personnel wherever located are managed by and report through this position.

Each of the above EVPs receives incentive compensation based on Tellabs’
consolidated financial and operating results.
In fact, each EVP received the exact same cash bonus amount for 2004
based on Tellabs’ consolidated financial and operating results.

Analysis and Conclusion Regarding Reportable
Segments (Response to Comment 1.a.)

Accounting References:

Paragraph 10 of SFAS 131 states that an operating segment is a
component of an enterprise:

a)              That engages in
business activities from which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other components
of the same enterprise),

b)             Whose operating
results are regularly reviewed by the enterprise’s chief operating decision
maker (“CODM”) to make decisions about resources to be allocated to the segment
and assess its performance, and

c)              For which discrete
financial information is available.

Paragraph 17 of SFAS 131 provides that two or more operating segments
may be aggregated into a single operating segment if aggregation is consistent
with the objective and basic principles of the Statement, if the segments have
similar economic characteristics, and if the segments are similar in each of
the following areas:

a)              The nature of the
products and services

b)             The nature of the
production processes

c)              The type or class of
customer for their products and services

d)             The methods used to
distribute their products or provide their services

e)              If applicable, the
nature of the regulatory environment, for example, banking, insurance or public
utilities

Analysis and Conclusions:

As noted above, while our current organizational structure differs from
past structures, the facts relevant to the segment reporting have not.  To analyze our business with respect to
possible reportable segments we first applied the three-prong test stated above
to determine if we had one

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or more operating segments. We
reviewed our business structure from both a product and geographic perspective
and concluded the following:

•                  Tellabs
does not have components below the consolidated level that are engaged in business
activities as defined in SFAS 131, paragraph 10.

•                  Our
CODM reviews consolidated results to make resource allocations and assess
performance.

Our CODM receives, analyzes and shares the following financial reports:

1.               To make operating
decisions, our CODM designed a report that he receives at a three hour
bi-weekly meeting to review with his executive team (the eight EVP positions
listed above).  In addition to these
scheduled meetings, these reports are prepared on an ad hoc basis to aid him in
select decision making between the bi-weekly meetings.  The report contains consolidated financial
data including: revenue, gross profit, operating expenses, operating income. It
also contains a number of consolidated-level operating metrics such as bookings,
backlog, inventory and headcount.  The report
also includes products grouped by profit margin levels and how they might
impact overall margins during the quarter.

2.               On a quarterly
basis, our CODM updates our Board of Directors on the results of operations and
financial health of our company using a presentation prepared by our CFOs team,
which presentation provides consolidated-level actual results and forecasts.  The Board of Directors also receive a
mid-quarter report four times a year from the CODM.  This report contains a forecast of consolidated
revenue, gross profit, operating expense, operating income and earnings per
share for the quarter and an update from each EVP on any important activities
or events for their areas of responsibility .

3.               On a quarterly
basis, our CODM also receives an earnings call preparation package that
provides historical trend analysis and helps him answer questions.

4.               Subsequent to the
quarterly earnings call and Board of Directors meeting, our CFO conducts a quarterly,
one to two-hour operating review meeting that our CODM and EVPs attend.  The attendees receive consolidated operating
review information, product and functional information including product line
profitability. Our CODM uses this information to forecast current quarter
consolidated results.

There are no cash flow statements available for products or groups of
products, and balance sheet information is reported at the consolidated and
legal entity levels.  Inventory is
tracked and reported by product.  Fixed
assets are reported primarily by function or by responsible executive vice president,
but not along product or market lines.
The remainder of Tellabs’ assets and liabilities are tracked, reported
and discussed on a legal entity basis.

•                  Our
CODM assesses performance on a consolidated basis and makes resource allocation
decisions on that basis.  Accordingly, we
concluded that Tellabs operates in a single segment. Since Tellabs has only one
reporting segment, paragraph 17, which covers the aggregation criteria for
companies with more than one segment, does not apply to Tellabs.

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Analysis and Conclusion Regarding Reporting
Units (Response to Comment 1.b.)

Accounting References:

Under SFAS No. 142, paragraph 30, a reporting unit is an operating
segment or one level below an operating segment (referred to as a
component).  A component of an operating
segment is a reporting unit if the component:

•                  constitutes
a business (defined by EITF 98-3) for which

•                  discrete
financial information is available, and

•                  segment
management regularly reviews the operating results of that component.

In addition, according to EITF D-101, the FASB staff states that how an
entity manages its operations and integrates acquisitions are key to
determining the reporting units of an entity.

A business as defined by EITF 98-3 (6) is “a self-sustaining
integrated set of activities and assets conducted and managed for the purpose
of providing a return to investors.  A
business consists of (a) inputs, (b) processes applied to those
inputs, and (c) resulting outputs that are used to generate revenues.  For a transferred set of activities and
assets to be a business, it must contain all of the inputs and processes
necessary for it to continue to conduct normal operations after the transferred
set is separated from the transferor, which includes the ability to sustain a
revenue stream by providing its outputs to customers.”

Analysis and Conclusions:

As discussed above, our internal structure is a global, functional
structure which includes global sales and services, operations, finance, legal,
human resources, facilities, communications, information technology, technology
and marketing and business development. Therefore, we have determined that none
of our products constitutes a business because they do not contain all of the
inputs and processes necessary to continue normal operations as stand-alone businesses.  We also have considered the fact that our EVP’s
who have product line responsibility receive incentive compensation that is
based on Tellabs consolidated results and not on the basis of segment or
business component performance.

Based on all of the above, we have previously concluded and currently
conclude that Tellabs has one reporting unit and accordingly, one segment.

12. Income Taxes, Page 47

Comment:

2.               We note from your
disclosure that the valuation allowances were reduced “as a result of deferred
tax liabilities of $177.2 million and $9.9 million recorded in accounting for
the purchase of AFC and Vinci.”  It does
not appear from your disclosures that the subject valuation allowances were
initially recognized in connection with the deferred tax assets of either
acquired entity.  Accordingly, tell us,
and disclose in greater detail, your basis in the accounting literature for
recording the reversal of the tax valuation allowance in the goodwill account.

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Response:

Background

During the fiscal years ended December 28, 2001, and December 27,
2002, Tellabs incurred significant losses from its U.S. operations and had
recorded deferred tax assets related to those losses. At December 27, 2002,
we determined it was appropriate to record a valuation allowance against all of
our net U.S. deferred tax assets.  We
continued to maintain a full valuation allowance against our net U.S. deferred
tax assets for the fiscal year ended January 2, 2004, and the first three
quarters of 2004.

On November 30, 2004, Tellabs completed its acquisition of
Advanced Fibre Communications, Inc. (AFC), and on December 30, 2004,
Tellabs completed its acquisition of Vinci Systems, Inc. (Vinci).  In the accounting for these acquisitions, we
recorded net U.S. deferred tax liabilities of $177.2 million and $9.9 million
for AFC and Vinci, respectively.  The
nature of those deferred tax liabilities was such that,