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

To: David G. Pung who wrote (3522)	9/4/1998 6:01:00 AM
From: Jerryco	Respond to of 7342

Post from Yahoo Tellabs thread: <- Previous Next -> Message 2436 of 2452Reply Building TLAB For The Long TermITGuy76 Sep 3 1998 7:40PM EDTAttached is a research alert from Dataquest, a division of The Gartner Group. Gartner is an IT research and consulting firm. Thought folks might finds the conclusion interesting... As for Mr. Birck "single handily (sic) destroy(ing) this great company," it seems to me that as the largest shareholder of TLAB with a personal paper loss of over $1 billion during the last several weeks, he has a much greater interest than most of us in building a great company that lasts. Unfortunately, Wall Street's horizon is about as long as the leash that Hillary has Bill on right now. I believe that those of us who are truly in TLAB for the long term will be very handsomely rewarded! ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ August 31, 1998 Remote LAN and Internet Access Worldwide Dataquest Alert Kenneth Kelly Tellabs/CIENA Merger Hits Rough Waters Dataquest Perspective: Tellabs Inc.'s acquisition of CIENA Corporation for about $6.9 billion in stock has run into additional problems. Since AT&T Corporation announced on August 21, 1997, that it would discontinue evaluation of CIENA's 16-channel dense wavelength division multiplexer (DWDM) product, both companies have announced postponement of meetings during which the stockholders would vote to accept or reject the merger. As of last Friday, Tellabs has renegotiated its offer to acquire CIENA for $4.9 billion worth of stock. In a further development, CIENA has acknowledged that class- action lawsuits have been filed by two law companies alleging some improprieties on the part of several CIENA officers. The lawsuits allege that before disclosure of "adverse facts," specific officers and directors of CIENA sold large amounts of stock. The company has also been charged with issuing false or misleading financial statements that artificially inflated its stock prices to increase its apparent value. One lawsuit also claims CIENA failed to disclose that its 16-channel DWDM system undergoing trials by AT&T was composed of outdated technology and would not meet AT&T's stated requirements. CIENA' s management has stated that it believes the allegations it has seen so far are without merit and intends to vigorously defend the company and its officers and directors. Dataquest Perspective: Although CIENA never officially stated it had acquired AT&T as a customer for its DWDM products, it had placed a great deal of emphasis on obtaining a contract from AT&T. The problem here is that transmission system suppliers continue to have proprietary DWDM products, making it very difficult to work with or buy multivendor systems. Lucent Technologies has been the traditional supplier to AT&T for many products, including DWDM, and carries more clout than CIENA. As such, it was by no means a lock for CIENA to obtain AT&T's business. Dataquest believes that in spite of the problems faced by CIENA, a merger with Tellabs is still in both companies' best interest, albeit at the lower price tag of $4.9 billion. Despite the lawsuits and the AT&T loss, CIENA's products and technology coupled with the immense expertise to be gained by Tellabs continue to make a lot of sense. It is still a win-win situation. Dataquest also believes it is not beyond the realm of possibility that, if Tellabs' proposed merger with CIENA failed, another company seeking just this sort of opportunity could step up and complete an acquisition.

To: David G. Pung who wrote (3522)	9/4/1998 6:10:00 AM
From: Jerryco	Read Replies (2) \| Respond to of 7342

INTERVIEW-Tellabs committed to revised Ciena deal By Jessica Hall NEW YORK, Sept 3 (Reuters) - Tellabs Inc. (TLAB - news) Chief Executive Michael Birck said he is committed to the acquisition of Ciena Corp. despite the slide in the companies' stock prices and criticism of expected earnings dilution and revised merger terms. ''We're trying to provide whatever assurances we can that this is a wise decision, in our judgment. It is one that has longer-range or strategic implications,'' Birck told Reuters in an interview. ''Nothing has changed in that regard. We're disappointed that people have taken such a short-term view of this...but you have to balance your longer-term future against the thrill of the moment in seeing your stock price go up,'' he said. Telecommunications equipment maker Tellabs revised the terms of its proposed acquisition of rival Ciena last week, cutting the deal's value to about $4.7 billion from $7.1 billion. The revision had been widely expected after Ciena said its hopes for a huge contract from AT&T Corp. (T - news) had been dashed and warned that its third-quarter results would fall short of Wall Street forecasts. ''Some things have happened to them that seemed pretty bizarre...but I still think they are a strong company with excellent technology and good people,'' Birck said. Lisle, Ill.-based Tellabs needs Ciena's products, which increase the capacity of fiber optic networks, to break into some of the faster-growing segments of the telecom equipment market. Ciena, meanwhile, would gain access to Tellabs' broad customer base and experienced sales staff. Ciena, based in Linthicum, Md., has a limited customer base, and the market for its product line is becoming increasingly competitive. Combined, the companies will likely face price wars and may see profit margin pressures, analysts say. Ciena's recent string of bad news has slammed shares of both companies. The stocks slid further this week after the firms said the shareholder votes on the deal would be delayed until November. Previously, votes had been anticipated in September. The delayed votes added to uncertainty and raised concerns that more bad news could emerge before the deal closes, analysts said. Shares of Tellabs have fallen almost 54 percent since a peak in late July, before the bad news with Ciena began to unfold. On Thursday Tellabs shares were off $2.25 to $41.25, just above their 52-week low of $41. Ciena shares have lost 70 percent since late July. On Thursday they were down $2.46 to $26, a new 52-week low. Birck said he expects the deal to close in November, following the shareholder votes and regulatory reviews. ''It will close in November. I don't see any reason why it should not,'' he said. Birck defended the revised merger terms, even though the acquisition will hurt Tellabs's earnings more than originally expected. ''We'd always like a lower price. Everybody would....but I don't think we could have gotten the deal done...at a lower number. I think the thing would have broken apart if we had insisted on a lower number,'' he said. Birck said Tellabs would have likely lost a bidding war if Ciena had begun shopping itself around to other potential suitors. ''One can conjure up another scenario where they go out and market themselves to someone else...under those conditions we probably would have not have prevailed. As a result, I think we would have missed out on a technology that we believe is essential in the future,'' Birck said. He said each side almost walked away from the deal, but always came back to the negotiating table because the original motivation remained strong. Birck said the merger agreement includes a clause allowing the companies to renegotiate or walk away in the event of a material adverse development. Tellabs has talked to Ciena's customers, looked at the technology and ''done all the things that are appropriate to do to assure ourselves with a reasonable degree of certainty that there are no more than the normal sort of risks out there,'' he said. Tellabs must pay Ciena a break-up penalty of $100 million if it walks away from the deal. Ciena would have to pay Tellabs $200 million to walk away. Tellabs said it still has no information from AT&T regarding the reason or the timing of the decision not to further evaluate Ciena's products. Ciena and Tellabs found out about AT&T's decision on August 21, the day the merger partners' shareholders were originally set to vote on the deal. ''It is still one of the most bizarre things I've ever seen, both in its timing and the way it was done,'' Birck said. Tellabs said it is not investigating the timing of or motive behind AT&T's decision. ''We are not, but I think there are those out there who are doing some investigation,'' he said, without elaborating. Birck said he expects the combined company will be able to find new customers to make up any revenues that would have come from AT&T. Ciena said it expected less than $50 million in 1999 revenues from any potential AT&T contract. ''Tellabs has never had a substantial amount of business from AT&T and we've still managed to survive,'' he said.