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To: ViperChick Secret Agent 006.9 who wrote (50433)	8/21/1998 1:10:00 PM
From: SJS	Respond to of 58727

Lisa: _____ CIENA (CIEN) 31 15/16 -24 27/32, TELLABS (TLAB) 58 3/8 +1 1/8. More bad news for Ciena today, as the company says that AT&T will not pursue further evaluation of Ciena's DWDM systems. When Ciena preannounced a Q3 earnings shortfall last Friday, it also reported that AT&T had decided against deploying Ciena's 16 channel DWDM system. There was speculation at the time, however, that AT&T might step up to Ciena's 40 channel system -- that speculation ended today. A telecom equipment analyst who we spoke to this morning commented that there "was no way" Ciena could hit its revenue targets for 1999 without AT&T, and said that this was indeed "very bad news" for Ciena. The worst news for Ciena is that the AT&T decision now appears likely to derail its merger with Tellabs, which was to be a one for one stock swap. Ciena postponed its shareholder meeting scheduled for today at which it was to vote on the merger, and rescheduled for September 9. The company also said that it would have further comment soon. The market is not waiting for that comment, however, and has assumed that the deal with TLAB is either history or will be renegotiated at a sharply lower price for CIEN. The market has applauded this news for TLAB, but the analyst to whom we spoke noted that while this is good news for TLAB in the short term, the company still needs to add the optical products which the Ciena deal was to have provided. AT&T's vote of no-confidence in Ciena certainly creates doubts as to whether Ciena held the answer to TLAB's optical needs, and Cisco's (CSCO) decision not to enter the CIEN bidding sure looks prescient now.