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

To: Glenn D. Rudolph who wrote (2991)	9/13/1998 3:50:00 PM
From: Paul Tran	Read Replies (1) \| Respond to of 12623

DTI Warned That Ciena Wouldn't Be Primary Provider New York, Sept. 11 (Bloomberg) -- Tellabs Inc. and Ciena Corp., which agreed to a $7.1 billion combination in June, could have known a month ago that Ciena was unlikely to win a contract investors were counting on.<P>A Securities and Exchange Commission filing by Digital Teleport Inc. on Aug. 14 suggested that Ciena, based in Linthicum, Maryland, wouldn't get the $100 million telecommunications equipment order. Still, investors were surprised when DTI said Wednesday it had awarded the assignment to Pirelli SpA of Italy, as Ciena shares fell 30 percent. Tellabs had agreed to pay one share of its stock for each Ciena share.<P>Tellabs and Ciena said they had no previous knowledge of DTI's plans. A spokesman for Tellabs, based in Lisle, Illinois, said it hadn't seen the SEC filing. ''It's not the kind of thing you read,'' said Tellabs spokesman Tom Scottino. ''We don't study every filing our customers make. I have no reason to believe (Ciena) would read that.''<P>Some analysts are now criticizing Tellabs for that oversight. ''Tellabs's due diligence has been lacking,'' said Timothy Savageaux, an analyst at Volpe Brown Whelan & Co. in San Francisco. He has a ''neutral'' ratings on Ciena. ''If you're going to spend $7 billion of your shareholders' money, you should dot every i and cross every t,'' he said.<P>Ciena officials didn't return calls and officials at DTI, based in St. Louis, referred calls to a spokesman who wasn't available.<P>The SEC Filing<P>In an amended ''S-4'' filing with the SEC, DTI said it was ''dependent on a Pirelli affiliate and to a lesser extent, Ciena'' for equipment. In April, it said it was ''dependent'' on Ciena for this equipment. ''Anybody who was shocked hadn't read these filings,'' Savageaux said. ''Analysts who are recommending the stock should have seen this.''<P>Ciena shares rose 35 percent after Tellabs agreed to buy it. Since then, the stock dropped 81 percent as the company forecast disappointing earnings and failed to win contracts, placing the takeover in doubt. Tellabs last month reduced the amount of shares it will pay for Ciena by 20 percent.<P>Ciena shares fell 3/8 today to 15 15/16. Tellabs rose 1 to 45.