cnnfn.com
story follows (CIEN spokesman says deal is still on)::
CIENA clipped by rival
Pirelli unit gets lion's share of supply pact from key customer; deal still on
September 9, 1998: 1:06 p.m. ET
NEW YORK (CNNfn) - On the day that investors were supposed to vote on the $4.7-billion merger between CIENA Corp. and Tellabs Inc., shares of CIENA were knocked down by unrelated news of a lost supply contract that still cast a shadow of doubt over the once-revised deal.
The stock (CIEN) plunged 5-31/32 to 22-5/16 on unusually high volume of 12 million shares in midday trading and was among the largest percentage losers on the Nasdaq. Shares of its merger partner Tellabs (TLAB) rose 3-5/16 to 46-3/4.
The sell-off in CIENA was sparked by word that one of its customers, Digital Teleport Inc., has named a unit of Pirelli SpA as an added supplier of fiber-optic network equipment. Prior to the $240 million contract, CIENA was the exclusive supplier of WDM equipment to Digital Teleport.
"I didn't get a sense it was a deal breaker, but it does highlight why they renegotiated the terms," said Steve Levy, analyst at Lehman Brothers.
"This is a pretty significant announcement because it's a big contract. It was a pretty good CIENA account," Levy said.
However, company spokesman Denny Bilter confirms the deal is still on and shareholders still are expected to vote on the transaction in mid-November.
With the new contract, Pirelli will receive the lion's share, or about 80 percent, of the supply agreement with the remaining 20 percent going to CIENA, Lehman's Levy said.
CIENA's Bilter declined to comment on the specific details of the supply agreement. <Picture: Link to top>
-- by staff writer Robert Liu
Copyright c 1998 Cable News Network, Inc.
ALL RIGHTS RESERVED.CIENA clipped by rival |
