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Technology Stocks : TLAB info?
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To: Gary Korn who wrote (3633)9/12/1998 12:25:00 PM
From: Chuzzlewit  Read Replies (1) of 7342
 
Gary, I certainly agree that arbs have not re-established a position in the merger. I was simply pointing out that that made a great deal of sense -- certainly more than their absence in the CCSC merger.

I think focusing on a multiple of sales to derive an acquisition ratio is incorrect for a variety of reasons, but the primary one is because a company purchases another to increase future earnings. The recent contract loss cited price as one reason, which means that we are seeing margin pressure.

So the real question is how will Ciena boost the future earnings of Tellabs? The recent stampede of customers away from Ciena says to me that the worth of the company may be related only to its technology -- not its customer base.

Your point about company A is also interesting because it raises the question of company A's continued interest given recent events. If I were company A's CEO I would have a much lowered valuation on Ciena now than two months ago.

TTFN,
CTC
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