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Technology Stocks : Ciena (CIEN)

CIEN 191.74

-1.3%

Nov 14 4:00 PM EST

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To: jach who wrote (3206)	9/16/1998 6:09:00 PM
From: professor	Read Replies (3) of 12623

The news today tells you again the desire of Lucent to squash the deal between Cienna and Tellabs. Tellabs wasn't smart enough to realize what was happening and got duped by Lucent. Isn't the outcome exactly what you would have wanted if you were Lucent. Ruin your competitor by putting out false information about their product and letting short sellers feed on this information. Coupled with stock weakness TLAB started to think their pristine stock price was linked to the deal. If TLAB had talked up the deal all the way through and not wavered, the deal would have gotten done, TLAB stock price would be over $60 and CIEN's name wouldn't have been ruined in the eyes of their customers. This is EXACTLY what Lucent hoped would happen and it did. Both Ciena and Tellabs have ruined their own future. They should have done the deal without haggling over price. Questioning the underlying business of a company you are about to buy will only undermine that company's business and possibly your future. Although some say TLAB Mikce Birke is smart I think he got bad advice on how the stock market and shareholders perceive things. He should have stuck to his guns about the long term vision of selling Ciena products within the Tellabs framework. The shareholders that were complaining about the deal were short term momentum players not long term holders who understood the future prospects of the company without Ciena. When the deal was called off the long term holders sold heavily despite some small buying from arbs and short term momentum players. TLAB stock price will not appreciate without the underlying support of long term holders. So Birke didn't really understand the workings of Wall Street and fell right into the grand strategy of Lucent. Lucent knows how to run their business and how to work Wall Street to its advantage. This is evidence by their ability to get a 50 multiple on 1999 numbers and be considered pristine. TLAB has lost that status and can't get it back for a long, long time.

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