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

To: DMaA who wrote (4982)	2/3/1999 12:52:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 7342

From thestreet.com: thestreet.com Tellabs Likes the Single Life By Kevin Petrie Staff Reporter 2/2/99 3:04 PM ET Maybe fleeing the altar isn't such a bad idea. Tellabs' (TLAB:Nasdaq) proposed marriage to Ciena (CIEN:Nasdaq) imploded late last summer after blue-chip customer AT&T (T:NYSE) rejected Ciena's products. Both stocks fell but Ciena took being jilted harder, sinking as much as 80% in a month. Faced with severe price competition ever since, Ciena has remained under pressure: The stock now trades at 21 compared with summertime highs of 88. But the breakup has led to a period of personal growth for Tellabs. Four short months ago Tellabs stock sat at 33, down 60% from the summer. "People thought we were a two-trick pony," says Tellabs CEO Michael Birck. To prove them wrong, the Lisle, Ill.-based telecom supplier has renewed a long-lived research effort to leapfrog Ciena's bandwidth-boosting technology. As early as January 1997 Tellabs bought a group of patent-armed scientists from IBM (IBM:NYSE) to develop optical systems. When the merger broke up those plans were dusted off. Tellabs' most exciting new products will carry light signals rather than electrons. In mid-year Tellabs aims to ship test units of an optical product that does Ciena's job and more. Birck cagily refers to it as a type of "optical cross connect" that directs different-colored lightwaves on local networks. Ciena intends to ship its first local-network product within three months, but it has not stated any plans publicly to develop the advanced optical systems Tellabs is mulling. "That's going to be a slow and steady migration path," says analyst Chandan Sarkar with Soundview, whose firm has no banking ties to Tellabs. Sarkar rates Tellabs a strong buy because of its durable core business: plain electronic circuit technology for carriers, which continues to sell robustly. It's working. From a low of around 33 in October, the stock has climbed to 83 today -- roughly where it traded at the height of fervor for the Ciena merger. Tellabs now trades at 40 times trailing earnings. Birck is not shy about making more deals, but next time he'll think harder about what price to pay for a start-up: "New products have a way of surprising you." Four years ago, Birck thought his Cablespan product for cable telephony was hot. It lagged until cable companies started buying in 1998. Last year Tellabs snapped up Coherent Communications to firm up its hold on "echo cancellers," which clean signals in both wireless and wired networks. In 1998 Tellabs' revenue jumped 38% to $1.7 billion and profits, excluding one-time charges, soared 50% to $398.3 million, thanks to sales of "digital cross-connect" systems such as its Titan that interweave channels of electronic signals. Titan allows Tellabs to compete with the likes of Lucent (LU:NYSE). "The move to data still helps them," says Ned Brines, analyst with Roger Engemann & Associates, a longtime holder of Tellabs. Most of the company's expected 25% profit growth will turn on basic network plumbing this year. Tellabs hasn't made predictions like those of Cisco (CSCO:Nasdaq) CEO John Chambers, who said last month that circuit networks are dinosaurs that will be made extinct by Internet protocol, the lingua franca of computers on the Internet. "Unlike many of our competitors, we don't spend much time touting things that aren't going to happen for a year," says Birck. As a longtime player in this field, Birck understands the pace of the phone business: He became CEO of Tellabs in 1975, nine years before Ma Bell broke up and 16 years before Chambers signed with then-fledgling Cisco. Tellabs has long served the Baby Bells, while Cisco comes from the faster-moving corporate market. Right now, Tellabs is doing just fine by doing it slow but steady. Who says single life doesn't pay?