What’s Up With Tellabs?
Quite a nice day for Tellabs (TLAB), which jumped 64 cents, or 12.3%, to $5.84 in Thursday’s trading. There was no news on the stock, and the only research item I came across was a brief note from Morgan Keegan’s Simon Leopold on the communications sector; he wrote that he sees “material challenges for Tellabs to grow in 2008.” Not the stuff from which dreams are made.
On the other hand, Tellabs is an oft-mentioned takeover target, and I would not be surprised if speculation resurfaced again today. I would also note that the stock has been fairly ugly lately, and trading at levels not seen since 2002; the company has zero long term debt, and almost $4 a share in cash, about two-thirds of its market cap.
A spokesman for the company said Tellabs announced no news today, and had seen no research other than the Morgan Keegan note. He also said he has heard no rumors today.
I would also note that volume totaled 28.5 million shares, more than triple the daily average turnover. According to trading data I just pulled from Yahoo Finance and sorted in Excel, it was among the 20 heaviest trading days in the stock since 1990.
If you have other theories, please pass them along.
Yesterday’s spike in the price could possibly be on the positive sentiment in the telecom sector following relieving comments by the COO of Verizon Communications, coming close to the heels of AT & T’ discouraging comments on softness in its consumer business. The price chart and the accompanying daily momentum oscillators also suggested that a near-term bounce was on the cards.
Not often that a tech company trades near or below it book value. Under book value and maybe still on the radar for a buyout seems like a good combo.
i think the stock got extremely oversold as you say, and than VZ said good things reagrding the year and once it got going , well the sellers were clean…good piece as usual..the vol the day prior was large as well…
I think as we approach Jan 22, speculations are being fueled. The former CEO of TLAB was against a potential acquisition of the company. A stock with such a profile/history/price and healthy capital structure must be a beautiful acquisition target and i think we will soon hear news pertaining an acquisition. In 10 days possibly!!
So what is a fair take out price?
Tellabs will be using the Optical Network Terminal boxes(ONT) from TXP Corp (TXPO) in the future, imo. This will bring great margins and a real boost in their revenue line.
I think TLAB is worth much more than its current market cap (less than a billion dollars excluding cash.)
But because the entire broadband networking space sells at such low valuations, any buy-out right now would be $7 - $8.
The wireline networking sector is likely to keep dropping in the current market selloff.
Still, TLAB seems cheaper than most of its competitors. Any ideas on why this is?
Although slightly long this, I am not sure the stock will recover soon.
The previous negotiations based the buy out price on $15 when the stock price was $9. I strongly believe negotiations will revive (especially after the resignation of the former CEO who was against this)and we will hear news around Jan 22 for a buy out proposition. extrapolating a reasonable buy out price using the same proposed ratios in the previous offer would yield a price of $9 - $10.
I would be happy with $10 at this point!!!
not just spec…. check out the options activity…people are putting some money betting on a move up soon
TLAB has been very oversold and should be trading in the $8-10 range.
tellsbs should be bought at 21 a share that is what it is worth in my opinion I have followed this since 1992 and saw jt mirror image cisco in price
and now what?????? We are well into the new year and it continues to fall….
Tech Trader Daily is a blog on technology investing written from Palo Alto, California by long-time Barron's West Coast Editor Eric J. Savitz. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields.
