Cisco Takeover Plan Roils Network Stocks
Cisco Systems Inc.’s deal Thursday to buy two closely held firms for a combined $7.4 billion intensified investor interest in the networking sector.
Cisco, whose shares edged 31 cents higher to help trim the Nasdaq composite’s slide, was upgraded to “strong buy” by an analyst at Thomas Weisel Partners, and others reiterated positive ratings on the Internet equipment giant’s stock.
Among the sector’s other gainers and losers on Nasdaq:
* Tellabs Inc. tumbled $5.19 to $62.56 as industry watchers said it now faces a direct threat from Cisco. Lisle, Ill.-based Tellabs is a leading maker of phone equipment. Cisco’s planned acquisition of Cerent Corp. “promises to redefine the industry landscape,” wrote analyst James Parmelee of Credit Suisse First Boston.
* Ciena Corp. climbed $2.44 to $36.75. Shares of the Linthicum, Md., company were upgraded to “buy” by Banc of America Securities. Ciena’s acquisition by Tellabs fell apart last year after its earnings sputtered.
* JDS Uniphase advanced $2.94 to $115.50. Parmelee expects makers of optical components to emerge as beneficiaries of tougher competition among their customers. San Jose-based JDS is the leading maker of parts for fiber-optic equipment in phone networks. Optical Coating Laboratory, which also makes fiber-optic components, zipped $7.50 to $77.88.
* Advanced Fibre Communications Inc. climbed $2.31 to $16.94. The Petaluma, Calif., company is an investor in Cerent.
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Networkers on the Move
Networking-related stocks were in the spotlight Thursday as Cisco Systems agreed to buy two closely held companies for $7.4 billion. Among the sector’s major movers:
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Ticker Thursday Thurs. Thurs. % Year-to- Company symbol close change gain/loss date chg. Advanced Fiber Comm. AFCI $16.94 +$2.31 +15.8% +54.9% E-Tek Dynamics ETEK 60.75 +7.63 +14.4 +127.1 SDL SDLI 91.13 +11.19 +14.0 +359.9 Optical Coating Lab OCLI 77.88 +7.5 +10.7 +199.5 Ortel ORTL 18.06 +1.75 +10.7 +106.4 Ciena CIEN 36.75 +2.44 +7.1 +151.3 3Com COMS 25.31 +1.44 +6.0 -43.5 JDS Uniphase JDSU 115.50 +2.94 +2.9 +233.0 Tellabs TLAB 62.56 -5.19 -9.0 +82.5 S&P; 500 index SPX 1,362.01 -19.78 -1.4 +10.8
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Source: Bloomberg News
