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Technology Stocks : TLAB info?

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To: Jerryco who wrote (5610)	5/27/1999 10:55:00 PM
From: A. Edwards	Read Replies (1) of 7342

Merrill has something to say about the acquisition too: MERRILL LYNCH Michael E. Ching Timothy P. Long May 27, 1999 Highlights: · Tellabs announced that it has agreed to acquire Alcatel's DSC Communications business in Europe, which provides SDH and DWDM transport solutions. · Under the terms of the deal, Tellabs will pay about $110 million in cash for the division. The transaction should close in June. In 1994, DSC bought this business (formerly called NKT Elektronik) for $149 million. · We estimate that the transaction will be dilutive to 1999 EPS by $0.01 and will be accretive to 2000 EPS by $0.01. However, current business trends are strong enough that we are maintaining our 1999 EPS estimate of $1.28 and our 2000 EPS estimate of $1.60. · The acquired business, which employs about 200 engineers, had revenues of about $100 million in 1998,and should contribute about $50 million to revenues in 2H99. · We believe there are opportunities to bundle these products with MartisDXX sales. For 2000,we estimate that sales of these new products could reach $150 million. · Our 12 month price objective of $64 is based on 40-times our 2000 EPS estimate.

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