I'll concede Ciena may have gone up in part due to the Ascend-Lucent merger, but I suspect it has more to do with strength in the fiberoptics sector.
At any rate, the only apples-to-apples player is Newbridge and we get a mention.
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January 13, 1999
Ciena Corp. Up 20% Amid Renewed Takeover Speculation
Dow Jones Newswires
By Dinah Wisenberg Brin
PHILADELPHIA (Dow Jones)--Shares of Ciena Corp. (CIEN) climbed more than 25% Wednesday, then retreated some, in what analysts and the company call a positive reaction to Lucent Technologies Inc.'s (LU) plans to buy Ascend Communications Inc. (ASND).
One analyst also cited the upcoming expiration of options on some 3 million Ciena shares.
The Linthicum, Md., telecommunications equipment company's stock was up 2 3/4, or 18.8%, at 17 3/8 on volume of nearly 24.7 million shares, compared with a daily average of 7.2 million shares. Earlier Wednesday, the shares traded as high as 19.
Analysts said Lucent's $20 billion stock-swap deal to acquire telecom equipment maker Ascend, announced earlier in the day, renewed attention on Ciena and similar companies as attractive businesses.
Resulting takeover rumors also may have helped run up the stock price, according to analysts, some of whom discounted speculation that Cisco Systems Inc. (CSCO) or Tellabs Inc. (TLAB) would seek a Ciena merger.
"Don't discount the impact of one of the biggest deals in the history of network (communications) with Ascend and Lucent. That's certainly going to spawn commentary all around," said Suzanne DuLong, Ciena's director of investor relations.
"This (deal) is really validation of the vision that Ciena's been talking about," she said. The merger joins two different layers of telecommunications network architecture, an idea Ciena has been advancing, said DuLong.
The Lucent-Ascend deal spawned speculation about Ciena being a takeover target, which in turn may have helped drive up share price, but DuLong would not comment on the rumors.
Tom Burnett, founder of the Merger Insight research service in New York, also attributed the price rise, in part, to the Lucent announcement.
"It puts a validation on the economic worth of the telecom equipment companies," he said.
"With Ascend disappearing there just aren't that many equipment candidates out there that are big enough to make a difference," he said. "There aren't a lot of them and there's a lot of buyers."
Nokia Corp. (NOKA), Ericsson Telephone Co. (ERICY) and Siemens AG, all European companies, would probably be interested in expanding in that area, according to Burnett, but he had no idea whether they are interested in Ciena.
"It's part rumor, it's part Ascend and it's part options trading," he said of the price surge, noting that Ciena's January listed options expire on Friday, creating a rush to buy among investors who were short on those calls.
Some three million shares comprising open interest from three exercise prices - 15, 17 1/2 and 20 - expire on Friday, Burnett said. The stock rose through the first two strike prices and neared the third on Wednesday.
Other analysts also cited the Lucent deal in price-driving speculation about Ciena's future.
"Clearly, it is a consolidating industry," BancBoston Robertson Stephens analyst Paul Silverstein said. However, Silverstein said he doubted Ciena was in talks with Cisco.
CNBC-TV reporter David Faber cited a Cisco rumor on the air Wednesday, and investors on a Yahoo! message board discussed rumors of a Ciena-Cisco or Ciena-Tellabs merger.
"I just don't believe a Tellabs-Ciena deal with happen in our lifetimes," Silverstein said. A proposed merger between Ciena and Tellabs collapsed last year.
In September, Cisco Chief Executive John Chambers told The Washington Post there was a "very low probability" his company would make a bid for Ciena.
"Cisco has said point blank on a number of occasions that it's not interested in Ciena, so I would think it unlikely that they would make such a move, particularly with this timing," Sanford Bernstein analyst Paul Sawaga, who covers Cisco, said.
Cisco would not want to appear to pursue Ciena on concern over the Lucent-Ascend deal, he said.
But Lehman Brothers analyst Steve Levy said he thought the Lucent deal should make Ciena attractive to Cisco or 3Com Corp. (COMS). "I don't think any one of those companies is in discussion with Ciena but it's pretty plausible that they'd want to be," he said.
Levy also discounted talk of a Ciena-Tellabs union. Tellabs closed at 81 1/8 Wednesday, up 4.7%.
Newbridge Networks Corp. (NN), another telecom equipment company, closed at 36 3/16, up 4.1%, while Fore Systems Inc. (FORE) closed at 20 5/8, up 3.4%.
A Cisco spokesman didn't return a call seeking comment.
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