Ciena, Tellabs Merger Is in Doubt

Ciena Corp. shares plunged 45% amid concern that Tellabs Inc. could reduce its pending $6.86-billion offer for the top maker of equipment used to boost capacity on phone networks. Tellabs, whose products direct traffic on phone networks, postponed its shareholder vote on the Ciena purchase until Sept. 9 after Ciena said AT&T; Corp. had decided not to buy its equipment. AT&T; declined to comment. Linthicum, Md.-based Ciena was looking to AT&T; to make up for slower demand at some big customers, and investors expect the lost business to force Tellabs to lower its offer, from a 1-to-1 stock swap. “The market is saying this deal is broken,” said Patrick Houghton, an analyst with Wheat First Union who rates Tellabs a “buy.” Lisle, Ill.-based Tellabs said it will schedule a board meeting next week to discuss the status of the acquisition. Ciena fell $25.53 to close at $31.25 on Nasdaq, slashing $2.62 billion from its market value. Tellabs rose $5.19 to close at $62.44, also on Nasdaq. Ciena shares have fallen about 66% from a record $92.38 on July 21. Ciena said it was surprised by AT&T;’s decision but not discouraged.