CIEN and TLAB will be at merger talk again ?
It is still puzzle me that why CIEN turned down the 100M fee from terminating the merger with TLAB. Maybe Cien still wants to keep it as an open option. Now TLAB has send a clear signal over its long term business/fundamental and future spending of regional phone companies, another attempt at buying out CIEN doesn't look like far fetch. TLAB, or CSCO for that matter, needs CIEN technology.
What do you think ?
as far as CIEN stock price concern, IMO, it is like a compressed spring. It will explode as soon as there is a solid good news.
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Tellabs (Nasdaq:TLAB - news) , a designer, manufacturer, and service
provider of telecommunications voice and data equipment, rang up $5 3/16 to $43 15/16 after reporting its 29th consecutive quarter of
year-over-year earnings growth. The company's third quarter saw record
top line and bottom line growth, eclipsing the prior record that was set in the second quarter. Third quarter sales were $423.5 million, which was the highest for any quarter in the company's history, and up 36.9% from sales in the prior year's Q3. Net income for the third quarter was $87.7 million up 36.5% from a year earlier (or $0.49 per fully diluted share excluding the $0.04 merger charge, beating the $0.46 estimate) -- and 50% greater than the comparable period net of the charge taken for its merger with Coherent.
As with the previous quarter, strong sales of the company's flagship
Titan 5500 digital cross connect system led the revenue charge, picking up 49% of the top line. The company's failed merger attempt with Ciena (Nasdaq:CIEN - news) and questions about its product pipeline (particularly the Wave Division Multiplexing strength that it was going to buy from Ciena) combined with looming recessionary concerns had many investors wondering about Tellabs' future. Recession? What recession? Tellabs went out of the way in its conference call (Replay: 1-800-633-8284. When prompted, enter the Tellabs reservation number 1627780) to downplay recessionary fears in the telecommunications equipment marketplace that it serves.
With analysts having modeled -- with no SG&A synergies -- a
Tellabs/Ciena combination EPS estimate of $2.20 for 1999, the company's current suggestion that it could hit $2.40 by itself next year (on revenues of $2.1-$2.2 billion) has investors scrambling to bid the company up. In addition, helping things along was Tellab's projection that regional bell operating companies' spending will be up 15% in 1999, as well as competitive interexchange carrier, competitive local exchange carrier, and competitive access provider spending, which will climb on the order of 30-40% -- with possible upside on that number too. More immediately, Tellabs reported that it's comfortable with the fourth quarter EPS projection of $0.58 on revenues of $490-500 million. In Q4 the firm will see a double-size version of its Titan SONET product begin to ship, which should provide some possible upside to this figure as well. All this serves to highlight the fact that the $200 billion telecommunications infrastructure market is indeed in the throes of a global transition and is still in the nascent stages of a multi-decade spending cycle. Questions surrounding capital investment center more around necessity than want. |
