Tellabs (NasdaqGS: TLAB) is feeling the pain of a Morgan Stanley analyst research note that says AT&T (NYSE: T) is going to make Cisco (NasdaqGS: CSCO) its preferred routing supplier of choice. Of course, the street did not like this news and punished Tellabs by driving down its shares more than 6.3 percent yesterday.
Ehud Gelblum, a Morgan Stanley analyst, wrote in a research note that AT&T is going to make a "relatively quick transition away from" Tellabs' 8860 router to a Cisco platform sometime in 2011.
Although neither AT&T nor Cisco would comment on the situation, Tellabs spokesman George Stenitzer said in a Reuters article that investors were overreacting to nothing more than a rumor. "We continue to compete for future business at AT&T and other companies," he said. "The solution we're providing to AT&T has a longer life and a longer runway in the network than the market has given it credit for."
Gelblum wrote that while AT&T will continue to purchase Tellabs equipment for wireless backhaul needs throughout 2010, demand for its equipment will decline in 2011 as it incorporates more Cisco gear in its network.
- Reuters has this article
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