Tellabs: UBS Downgrades; Wireless Soft; M&A Not Likely
Tellabs (TLAB) shares are lower Friday morning after UBS analyst Nikos Theodosopolous cut his rating on the stock to Neutral from Buy. He also trimmed his price target on the stock to $6.50 from $8.
Theodosopoulos says he had upgraded his rating on the shares in January based on two catalysts: a recovery in U.S. wireless infrastructure spending and M&A potential. But he now has shifted his view on both fronts.
On the one hand, he says wireless pending is “ramping slower than expected” in the U.S. And on the other hand, he says an acquisition of the company now looks less likely in the near-term. Theodosopoulos notes that shares of potential buyers Nortel (NT) and Ericsson (ERIC) are both down sharply. He notes that Nortel and Tellabs now have comparable market caps; he thinks Ericsson may find Nortel to be a more strategic target.
Tellabs today is down 25 cents, or 4.4%, to $5.40.
there are sill rumours in the ME that a GCC fund is interested in TLAB; some are favorng a bid by NOK at around $ 10per share.
NT, now at firesale price, an excellent buyout candidate for ERIC or other. Finally starting to turn itself around, NT likely could be acquired for $10-$15 a share.
I don’t know why Nikos continues to post stories about this company. He hasn’t had anything new to say about them in 5-6 years.
TLAB is the perennial bridesmaid. Ain’t nobody want to marry her, ever, ever, ever. TLAB’s long-suffering shareholders, and I count myself among those miserable folks, have a couple more years of pain to endure before the ship is righted. And it will be righted.
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.
