Tellabs Goes Shopping
During the company's first-quarter earnings conference call today, CEO Rob Pullen said that, while he believes the vendor can grow with the assets it already has (that's "organic growth" for those with Wall Street aspirations), "we are examining acquisitions, but there is nothing imminent."
While "imminent" could mean anything from a few days to a few months (don't expect Tellabs to buy anyone before this week's American Idol contestants have finished murdering more classic ditties), it does suggest that Tellabs might dip into its healthy cash pile ($226.2 million currently) before the year is out.
So where might Pullen and his team be looking to splash some cash? Well, the wireless backhaul sector is proving fruitful at present, so maybe Tellabs will look to bolster its capabilities in that segment of the packet transport market, where it's regarded as one of the leaders by analysts such as Heavy Reading's Mr. Backhaul, Patrick Donegan. (See Is DragonWave Ripe for Takeover? )
Maybe, though, it should consider a more radical move. Tellabs sees great future potential from the mobile operator market in general, and, as we know, the wireless world is migrating towards LTE (Long-Term Evolution). That'll be good for backhaul, of course, but it also means there's an increasing volume of mobile data traffic that needs to be managed, and to do that carriers will need next-generation mobile packet core technology...
Making a move for a company like Starent Networks Corp. (Nasdaq: STAR) might seem a wild foray for a vendor such as Tellabs, but the growth potential and the margins are juicy. (See Starent Blazes Q1 Trail.)
Stranger things have happened, haven't they?
— Ray Le Maistre, International News Editor, Light Reading
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