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Backhaul

Tellabs Close to Carrier Access Buy

Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) is close to acquiring Carrier Access Corp. (Nasdaq: CACS), according to Light Reading sources close to both firms. The two firms have been in talks for a while, but that activity has accelerated now that Carrier Access has officially put itself on the block.

The offer price, according to just one of our two sources, is "close to $7 a share", which is slightly above what Huawei Technologies Co. Ltd. was rumored to have put out there in a letter of intent sent to Carrier Access last month.

The last few days have been a blur to Carrier Access, the small equipment company that hasn't seen a year of positive earnings since 2004. Its stock has been losing support on Wall Street; of the seven analysts following Carrier Access, three have Hold ratings and one has a Sell on the stock.

Earlier this week, Carrier Access COO Allen Snyder was promoted to CEO, replacing company founder Roger Koenig, who remains chairman of the board. Koenig's wife, Nancy Pierce, retired as the company's chief development officer, paving the way for the company to "pursue strategic alternatives."

Prior to that, Carrier Access had been picking up piece parts and solidifying itself in the wireless backhaul equipment space. In October 2006, it bought White Rock Shanghai, and in March it picked up Mangrove Systems' product portfolio.

The wireless backhaul space has been hot lately with the anticipation of carriers moving to 3G networks -- and that's where analysts say Carrier Access is most appealing. "Before it was all just voice, and only low bandwidth was required, but now you've got a lot of data traffic. The previous backhaul architecture doesn't scale to support it," says Gabriel Brown, chief analyst for Unstrung Insider.

So why buy Carrier Access? "Tellabs' gateway product is new and doesn't have all the features you would want, so this could be a way to skip having to develop it," says Brown. In addition, Carrier Access would bring additional exposure to AT&T Inc. (NYSE: T), which is a key customer for Tellabs.

Tellabs has long been speculated to be either a buyer or a seller in the M&A markets. (See Tellabs: Suitor or Bait? and Tellabs Tell?) "Tellabs' fundamentals are not in great shape, but they have a mountain of cash that they have to do something with," says one of our sources. "And once carriers can catch their breath, they're going to change their backhaul environments."

Neither Tellabs nor Carrier Access would offer comment for this story.

— Phil Harvey, Managing Editor, and Raymond McConville, Reporter, Light Reading

digits 12/5/2012 | 3:04:30 PM
re: Tellabs Close to Carrier Access Buy At around 2pm today, Carrier Access (CACS) was down a couple of points at around $4.36 or so...

Now at around 2.30pm it is up 16% at $5.23, and was higher a few minutes ago. Looks like the news is doing the rounds...
Larry, Monkey 12/5/2012 | 3:04:29 PM
re: Tellabs Close to Carrier Access Buy Light Reading does not permit any of its editors to own any financial position, including shares of stock, stock options, warrants, short positions or any other equity position, in any private or public company that is the subject of any editorial content published on the Light Reading Website.
Mark Sebastyn 12/5/2012 | 3:04:29 PM
re: Tellabs Close to Carrier Access Buy This is about the right time to tell everyone you don't own any CACS....
Raymond McConville 12/5/2012 | 3:04:29 PM
re: Tellabs Close to Carrier Access Buy And TLAB is down 4 percent. But that's normal for an acquiring company as hedge funds usually short the stock.
DCITDave 12/5/2012 | 3:04:29 PM
re: Tellabs Close to Carrier Access Buy No one here owns CACS.

I am long on Chipotle, though. Mmmm. Tasty.

ph
Larry, Monkey 12/5/2012 | 3:04:28 PM
re: Tellabs Close to Carrier Access Buy We all pee in a cup once a month.
Honestly 12/5/2012 | 3:04:28 PM
re: Tellabs Close to Carrier Access Buy Consulted to them back when I was able to sell all of my stock at $81, pre CLEC burst and when ADC was really a great OEM for them. Lots of technology there, but Roger and Nancy are bull headed to say the least, would not listen to anyone, ever. No shock that they needed to be shot in order to sell it. Willing to bet it was board forced.

Husband and wife teams are the kiss of death and no way you would get laid, If there was an issue in the office. :)
Stevery 12/5/2012 | 3:04:28 PM
re: Tellabs Close to Carrier Access Buy Light Reading does not permit any of its editors to own any financial position...

And out of curiosity, just how is that enforced?
DarkWriting 12/5/2012 | 3:04:26 PM
re: Tellabs Close to Carrier Access Buy Yet another Colorado company to be closed and jobs lost.

DW
bozolives 12/5/2012 | 3:04:26 PM
re: Tellabs Close to Carrier Access Buy Amazing it took the board so long to pull the plug on the dynamic duo.
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