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Time Warner Inc. Message Board

  • Novalis_97 Novalis_97 Sep 22, 1998 9:16 PM Flag



    NEW YORK -(Dow Jones)- The
    proposed marriage of Tellabs Inc. and Ciena Corp. is off,
    but on-line investors are betting that Ciena --
    despite its flaws -- will attract another

    The deal between Tellabs and Ciena collapsed Monday,
    after weeks of speculation that it would be shattered
    by troubles that beset Ciena in the months after the
    pact was first struck. Its earnings prospects darkened
    as the company lost out on a key contract with AT&T
    Corp. and its stock plummeted.

    But participants
    in on-line message boards still see value in Ciena,
    a Linthicum, Md., maker of telecommunications
    network gear. They expect another company to step up with
    an offer for the company.

    And Wall Street
    analysts agree. Many believe Cisco Systems Inc. (CSCO) may
    be the one. Officials at Cisco, a San Jose, Calif.,
    networking giant, declined to comment, citing company policy
    against discussing rumors or speculation. Ciena, for its
    part, said it wasn't involved in any merger

    "Our plans are to stay independent right now. We
    haven't talked to anyone," a company spokesman said. "We
    think our business is strong, bandwidth demand
    continues to grow, we have a strong balance sheet with over
    $200 million in cash, a bunch of satisfied customers
    and strong manufacturing facilities."

    But to
    many on Internet message boards and on Wall Street,
    those are all good reasons to believe another deal for
    Ciena will emerge.

    "Ciena has great products,
    customers and research and development. It makes them look
    pretty attractive," said Bill Rabin, an analyst with
    J.P. Morgan Securities Inc., in New York. Ciena's
    products are used by telecommunications companies to boost
    the capacity of their fiber-optic networks. Its
    customers include Sprint Corp. (FON), WorldCom -- now MCI
    Worldcom Inc. -- (WCOM), Bell Atlantic Corp. (BEL), and
    Cable & Wireless PLC (CWP).

    Joseph Nyi Nyi, an
    analyst at Gilford Securities, in New York, said Ciena
    would fit nicely with Cisco, whose primary business is
    in so-called routers, switches that direct data
    traffic on computer networks and ordinary telephone
    lines. "Cisco doesn't offer increased bandwidth
    [products], so [a Ciena acquisition] would make a nice niche
    market for them," he said.

    "Strategically, [an
    acquisition] makes sense for a lot of companies. Cisco is
    one," added Steven D. Levy, an analyst with Lehman
    Brothers Inc., in New York. "Increasingly, Cisco is going
    to find that the Ciena product sits right next to it
    in the phone networks, they end up connecting to

    Ciena and Cisco already have business ties. The
    companies have worked together to ensure that Cisco's
    products are compatible with Ciena's, said Tim Savageaux,
    an analyst at Volpe Brown & Whelan Co., in San

    Moreover, Savageaux said it wouldn't be
    out of character for Cisco to use an acquisition to
    expand its presence. For example, in 1996, Cisco
    acquired StrataCom, a network switch supplier, for $4
    billion. This year alone, Cisco has made six

    Copyright (c) 1998 Dow Jones & Company, Inc.
    All Rights

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    • Dulles, VA /DenounceNewswire/ -- August 33, 1998
      -- Fast on the heels of CompuServe's announcement
      last week of a new 800-number service
      (1-800-QUIT-CIS), America Online (NYSE: AOL) announced today its
      own 800-number service for customers who are mad as
      hell and aren't going to take it anymore.

      "Due to the increasing demand for customer
      cancellations, we're announcing today the opening of our new AOL
      Exodus Center to streamline the mass defection of our
      customers," said Steve Case, chairman of AOL, in a prepared
      statement. "Think of it like Ellis Island in reverse."

      To reach the new Exodus Center, customers can call
      1-800-QUIT-AOL between the hours of 4:00 to 6:00 am (EST) on
      days that begin with the letter F. "I know it's a
      challenge, but we're really striving to have completed
      subscription cancellations within sixty minutes of placing the
      call," says Case. "If you're still on the line after
      sixty minutes, well, all of our operators are busy or
      resting, and you'll just have to wait." Case figures AOL
      customers are used to waiting so he doesn't anticipate any
      problems. .

      AOL claims that it can generate a tidy
      sum of cash for each departing customer, by selling
      survey results to competitors. "We will make at least
      $500 for each person who quits," Case says. "Our
      competitors are more than willing to pay us for our
      customers' demographic data, and we're more than willing to
      sell it to them. It cost us $200 to get the customer
      in the first place, and we're making $500 as they go
      out the door. That's a net of $300 per customer." .

      After the announcement, AOL's stock lept to a six-month
      high of $140 per share. "Fewer customers mean fewer
      expenses, and that means higher profits," says one stock
      analyst with a buy recommendation who follows AOL, who
      added, "and the $300 per customer exit-revenue is just
      icing on the cake." .

      Asked how long the AOL
      Exodus Center will be in operation, Case replied, "We'll
      keep it open until each and every AOL customer has
      quit, or we've gone out of business, whichever comes

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