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Talk boosts Ciena stock; Linthicum company topic of rumors about takeover, contract; Shares up 22.8 percent; Closing price at highest level since September


Shares of Ciena Corp. jumped almost 23 percent yesterday on speculation that the Linthicum telecommunications equipment maker might soon win a new contract or be acquired by a larger company.

Ciena shares gained $4.1875 to close at $22.5625, a 22.8 percent increase. It was the company's highest closing price since Sept. 8.

Feverish takeover speculation is nothing new for Ciena. Since a proposed merger with Tellabs Inc. fell apart Sept. 14, there have been rumors that other large makers of telecommunications-network gear might want to buy Ciena.

The most recent round of suppositions focuses on two foreign companies -- Alcatel Alsthom SA of France and Canada's Northern Telecom Ltd.

Officials at the two companies could not be reached for comment, and analysts said there is little indication that the latest murmurings were realistic.

"I don't believe [Ciena] is talking to anyone presently," said Paul Silverstein of BancBoston Robertson Stephens in New York.

Reality has seldom stood in the way of a good stock boost. The telecommunications-equipment industry has been reshaped by mergers during the past year, and speculations of new pairings are rife. The rumor mill began churning again with Lucent Technologies Inc.'s announcement Jan. 13 that it plans to buy Ascend Communications Inc. for $19.7 billion.

The Lucent-Ascend deal is widely seen as putting added pressure on smaller, independent companies like Ciena to find partners. "Even though the Ascend merger was announced a week ago, it's still having huge effects on smaller companies," said David Toung of Argus Research Corp. in New York. "It just highlights that these smaller companies can help larger companies fill out their portfolio."

BancBoston's Silverstein said another set of rumors is swirling around Ciena -- namely, that the company might be on the verge of winning a major sales deal in Europe. To widen its once-tiny customer base, Ciena has picked up a number of contracts in Europe's burgeoning network-equipment market.

Ciena declined to comment.

Bloomburg News contributed to this article.

Pub Date: 1/23/99

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