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Technology Stocks : TLAB info? -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (2165)	2/19/1998 8:44:00 PM
From: Dave Dickerson	Respond to of 7342

To all-RECENT BUYOUT Acquisition of Coherent has been pretty well covered on the 2 talk strings and various home pages. I have just a few observations,based on the recent teleconference (2/17/98) Pres. Birck initiated the buyout. Tellabs has done echo cancellors for over 20 years. Recent growth in last several years has been suprisingly growthy at around 30% per year. These types of sales will change in character. Mike feels future will bring a broader array of products, ecspecially in wireless and cellular areas. Also he feels buyout will aide Tellabs to be faster in bringing these products to market. Other drivers in this echo-cancellor mkt. are voice over internet,satelite, and international traffic, dealing with broadband services and data. Tellabs has goal of suppying « of international mkts. in echo cancellor type products. Currently Tlab is 20% in internat. sales and Coherent is 70% in internat. sales. This move strengthened a pillar of the co. It's called non-dilutive of current PE ratio,outside of 2-3 cent per share up front cost, and modestly accretive ( some say this could add up to 10 cents net per share in 2 years) . Other areas of development will continue at full speed, as well as other potential acquisitions are not restricted by this move. Remember, they did this purchase by stock exchange, not cash. This was first time Tellabs used stock to enhance growth and the first time it has taken over a public co.( a real start up of Tellabs focusing more externally). Cultures of 2 cos. are very similar, Coherent has been careful in spending money, their goal was 200 mill in sales by year 2000. With 250 fine people,added to Tellab's 4000, They had no debt, a positive cash flow, a strong financial sheet. Their strong mgt. team will be retained. Mike feels this will improve time to market and help bring out new products. Sales and profits come in this fast developing mkt., from getting the best technology to market fast. In echo-cancellors, TLAB had 90 mill sales and Coh. had 74 mill in sales in '97,with '98 sales expected to be 180-190 mil. Sales are expected to grow 25-30 % per year, as well as growing market share. Various actions in mfg.,distribution etc.bring out cost savings and margins have improved in a competitive mkt. When you have top of line products, plenty of cash, top mgt., and you play in fast developing global telecommunications infrastructure markets, lots of interesting takeovers,new developments, and faster applications of new technology will take place. Looks like no Lucent takeover of Tellab's so far, and talk of major new contract with Bell Atlantic is rumored. DAVE DICKERSON