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AT&T decision throws Ciena-Tellab merger into doubt

Ciena shares subject to frenzied sales

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Ciena’s planned $7 billion merger with Tellabs is in danger of unravelling, f ollowing the failure of the telecoms equipment manufacturer to secure a massive contract with AT&T. News sent Ciena stock into a tail-spin, plunging 45 per cent on one day. In a massive vote of no-confidence, Ciena shareholders went in to a selling frenzy on Friday, With more than 29 million Ciena shares sold, trading levels were ten times the average daily volume. To make matters worse for Ciena, the company’s shareholders had been due to vote on the merger with Tellabs – the same day it announced that AT&T had scrapped its evaluation of the company’s 80-chanel wave division multiplexing systems. The vote was postponed – understandably in the circumstances – until September 9. In May, Ciena said it expected sales in the near term to be "largely dependent upon sales to Sprint, several new customers, and depending on the results of ongoing testing and evaluation, AT&T". In light of this, the mass exodus of Ciena shareholders, appears entirely sensible. Lucent is now the hot favourite to win the AT&T contract to supply more than 1,000 80-channel systems, according to US reports. ®

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