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Technology Stocks : Ciena (CIEN) -- Ignore unavailable to you. Want to Upgrade?

To: Brian who wrote (2796)	9/9/1998 4:41:00 PM
From: Paul Tran	Read Replies (1) \| Respond to of 12623

Tellabs Knew Ciena Wouldn't Win DTI Contract When Terms Changed Tellabs Knew Ciena Wouldn't Win DTI Contract When Terms Changed Linthicum, Maryland, Sept. 9 (Bloomberg) -- Ciena Corp. and Tellabs Inc. executives knew Ciena wouldn't win a contract from Digital Teleport Inc. at the time Ciena and Tellabs renegotiated their merger agreement two weeks ago, people familiar with the agreement said. Ciena shares plunged 30 percent today after DTI gave the contract to Pirelli SpA, an Italian cable and tire company. Tellabs shares rose on speculation that it might abandon the purchase of Ciena because of the lost contract. People familiar with a revised merger agreement reached by the companies last month said the reduced exchange ratio reflected assumptions that it wouldn't get the order, which analysts had predicted would have been worth $100 million in revenue for Ciena. Ciena fell 8 17/32 to 19 3/4 in trading of 32.6 million share, making it the most active U.S. stock. Tellabs shares rose 1 1/2 to 44 15/16. Tellabs agreed to pay $7.1 billion in stock for Ciena on June 3. Since then, the value of the acquisition dropped to about $3.6 billion, as Tellabs lowered the amount of stock it will swap for each Ciena share to 0.8 share from one share. The agreement now values Ciena at about $36 a share. With its shares trading at half that, some investors are betting the transaction won't be completed without a further reduction, or won't go through at all. Since reaching a record close of 88 5/8 on July 20, Ciena has plunged about 78 percent. Digital Teleport, a Ciena customer, today awarded a $240 million equipment contract to Pirelli. The move follows AT&T Corp.'s decision last month not to buy Ciena equipment, and Ciena's warning that third-quarter earnings will be less than half expectations.