Dear Fellow Stockholders,

In a year in which we collectively have experienced the largest financial shock since the Great Depression, stockholders have naturally focused on the governance and management of the companies in which they invest.

Tellabs has a talented management team, a sound strategy, and the discipline to execute in a market that continues to grow and change. The company is "managed by and under the direction of its Board of Directors," a board charged with representing your interests. Tellabs provides a great deal of information about the board — who we are, our expertise, our committees and membership, how often we meet and how the board is compensated. Yet there is one fact that should not escape your attention: the Tellabs board is dedicated to enhancing stockholder value and the long-term strength of the company through its oversight.

Tellabs' board members serve as business partners and as a sounding board to Tellabs' management. Oversight is important, but the Tellabs board also engages with management on the strategic direction of the company. Not only do we recruit directors to ensure adequate operational structure and accountability in the key areas of financial control, succession planning, compensation, compliance and corporate governance, but we work hard at recruiting board members whose backgrounds and experiences enlarge our capabilities and those of senior management.

The management of risk has become a hot topic in today's difficult financial environment. At Tellabs, we endeavor to steer a steady course. Indeed, we recognize that overreaction to risk can be paralyzing. While the global financial crisis presents unique challenges, the Tellabs board is an experienced group of business leaders who have managed through difficult times before. By tapping our board members' experience, we believe that we enlarge Tellabs' capabilities in challenging management's thinking for the best strategic outcome. The board takes its role in providing counsel to management very seriously, whether it is assessing opportunities in the face of risk inherent in business or addressing specific operational questions.

In spite of the dramatic decline in stock price which has battered all companies, Tellabs has the financial strength to weather this global credit crisis. As a company that has always practiced conservative accounting, Tellabs has a strong balance sheet with cash and no debt. This financial stability places Tellabs in the enviable position of being able to invest in innovation without going to the credit markets.

Tellabs' innovations help its customers succeed in achieving their objectives. Strong demand for telecom services will continue to shape the company's future. When almost half of Tellabs' revenue comes from products added since 2003, you get a sense of the company's innovation and the scope of change in our industry. Tellabs has reduced expenses in the face of market realities while investing in products where the company can achieve high return on investment. Tellabs is optimizing the supply chain to improve gross profit margins. There is no doubt that the financial environment is having an impact on Tellabs' customers who face reduced margins in a competitive and increasingly mobile and Internet-based world.

Like you, board members and executive officers are investors in Tellabs. That's one assurance that our interests are aligned with yours. We believe in transparency. Not only do we comply with all disclosure regulations, but we also publish additional information that helps you to become an informed investor and act as an advocate for the company.

Compensation has always been a hot button, but with the trillions of dollars in stock value lost this year, compensation has become front-page news. The Tellabs proxy statement extensively describes our philosophy and approach to compensation, as well as providing tables that display detailed information. We hope to strike a balance between being judicious about company resources and structuring pay to retain talented executives. We engage an outside consultant to help us develop compensation packages that contribute to the long-term strength of the company.

From the very beginning, Tellabs has had a very strong ethics program. You might say that ethics and integrity were our first products. By making our ethics program a cornerstone of the company, Tellabs has attracted high-caliber employees who share the company's values. We also have built-in safeguards to ensure that our ethics policy is applied consistently throughout the organization as well as providing a mechanism for any employee to make an anonymous report of an ethics violation. Tellabs is vigilant in safeguarding the company's reputation for integrity.

A single letter from the board chairman, signed by the board members, cannot alone provide reassurance to stockholders that we strive to act in their best interests. Rather, we see this as the beginning of a dialogue. If you have issues about our board and management, I invite you to write or to .

Thank you for the trust you have shown by your investment in Tellabs.

Sincerely,

Michael J. Birck
Chairman and Co-founder of Tellabs

Board members: