Tellabs, temple Ink Distribution Deal - Analyst Blog

By Zacks Equity Research,

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In order to expand its business globally, Tellabs Inc. ( TLAB ), a leading diversified manufacturer of telecom equipment, has chosen temple as an authorized distributor of its Optical LAN solutions.

temple is a private entity which mainly focuses on the distribution of infrastructure connectivity systems for the enterprise data and telecommunications markets. Hence, we believe that by assigning temple as the primary global distributor will help Tellabs to easily penetrate the European, Middle East and African (EMEA) markets. Tellabs' PartnerPlus Program will strengthen its bonding with distributors, value-added resellers and system integrators globally.

Tellabs' Optical LAN is a perfect substitute for traditional copper-based Ethernet LANs, which will save at least 80% more energy. Moreover, it slashes costs and space requirements for any organization by up to 70% and 90%, respectively.

The Optical segment of Tellabs, which develops these popular Optical LAN products, accounts for a major portion of the company's revenues. During the third quarter of 2013, it generated 45% of the total revenue. In the same quarter, rest of the world produced $93.4 million (47% of total revenue) as against $138.1 million (52% of total revenue) recorded in the year-ago quarter.

Hence, we believe that the recent deal with temple will not only help the company gain market traction globally but will also drive its top line, going forward.

Meanwhile, Tellabs has decided to become a private entity. On Oct 21, 2013, Tellabs declared that the company has entered into a definitive merger agreement with private equity firm, Marlin Equity Partners, which will acquire all outstanding shares of Tellabs for $2.45 per share in cash. The total deal size will be approximately $891 million. This deal is expected to close by the fourth quarter of 2013 and is not subject to a financing condition.

Other Stock to Consider

Tellabs currently has a Zacks Rank #3 (Hold). Other stocks in this segment, which are worth considering, include ShoreTel, Inc. ( SHOR ), Ubiquiti Networks, Inc. ( UBNT ) and Motorola Solutions Inc. ( MSI ). While ShoreTel and Ubiquiti Networks currently have Zacks Rank #1 (Strong Buy), Motorola Solutions has a Zacks Rank #2 (Buy).

MOTOROLA SOLUTN (MSI): Free Stock Analysis Report

SHORETEL INC (SHOR): Free Stock Analysis Report

TELLABS INC (TLAB): Free Stock Analysis Report

UBIQUITI NETWRK (UBNT): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: MSI , SHOR , TLAB , UBNT

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