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Technology Stocks : Stock Swap -- Ignore unavailable to you. Want to Upgrade?

To: Judy who wrote (14289)	6/4/1998 1:22:00 AM
From: Andrew Vance	Read Replies (1) \| Respond to of 17305

AV--A few months (not more than 3) back, I started talking about CIEN in the mid to low 40s I believe. While I did sell most of the stock, I did have some in reserve. As usual patience would have paid off. Better to get some than to get none. Chalk it up to lack of patience. Tellabs, Ciena Merge In $7B Stock Swap 06/03/98; 2:10 p.m. ET) By Gabrielle Jonas, TechInvestor Tellabs said Wednesday it is buying Ciena for $7.1 billion in a one-for-one stock swap between the two communications equipment companies. Tellabs makes and services voice and data transport and access systems. Ciena sells dense wavelength division multiplexing systems for long distance and local exchange carriers. Through its Alta subsidiary, Ciena also sells engineering services for telecommunications service providers. In midday trading, Ciena [CIEN] gained 3 3/4 to 61 5/16 on the news Wednesday, while Tellabs [TLAB] dropped 2 3/4 to 63 1/8. Potential competitors Northern Telecom [NT] dipped 3/8 to 63 7/8 and Lucent [LU] fell 13/16 to 70 7/8. "We won't be in Nortel's range yet or in Cisco's, but we'll be a formidable entity," said Patrick Nettles, president and CEO of Ciena, in a news conference Wednesday. "If we achieve $50 million in synergies in the pre-tax earnings for next year, we will be back to a non-dilutive approach." "What we're doing in putting together these two companies is creating a very major player in this industry worldwide," said Tellabs' president and CEO Michael Birck. "A very global perspective is part of that." Birck expects the combined company to take a charge in 1998 of about $50 to $60 million, or 17 cents a share, to cover the deal-making costs. "In 1999, we believe we'll see a break-even year, or better," said Birck. The transaction is expected to be accounted for as a pooling-of-interests, to qualify as a tax-free reorganization and to close during Tellabs' third quarter. Ciena will become a subsidiary of Tellabs and the resulting company will be called Tellab. Goldman Sachs was Tellabs' financial adviser for the merger, and Morgan Stanley represented Ciena. In February, citing a slowdown in orders from WorldCom [WCOM], Ciena warned of a weak second quarter. In late April, Tellabs reported a strong first quarter led by powerful revenue growth. "If you're going to be a major participant in the telecom equipment area, you have to be pretty broadly based," Nettles said. "What we have here now are the bricks and mortar of a major player." Following the merger, Birck will become chairman and CEO, while Nettles will become its president and chief operating officer. The combined company will be headquartered in Lisle, Ill. There will be no loss of jobs because of the merger, Nettles said. Ciena's facilities in Linthicum, Md., and Savage, Md., together with Tellabs' existing optical networking group in Hawthorne, N.Y., and Burlington, Mass., will form the core of the combined company's optical networking efforts, Tellabs said. I almost feel like TechMaster<GGG> Andrew Foad-Good story and I hope it translates to some equipment purchases but there may be more here than meets the eye. They need a great deal more money.