Beachhead

Tellabs may have to keep going it alone for a while, according to UBS Investment Research. Analysts there say the companies voted most likely to acquire Tellabs -- Nortel Networks and Nokia Siemens Networks -- are reeling from tough second quarters and may be too gun shy at this point to make a play for the Midwestern optical vendor.

The news comes as mid-sized Tellabs -- the dominant supplier so far to Verizon Communications’ high-profile fiber-to-the-premises deployment -- is forced to compete increasingly with larger vendors Alcatel-Lucent and Motorola for its share of Verizon’s attention. (The carrier’s migration from broadband passive optical networks to the gigabit-speed version brought new rivals into the mix.) To compete with larger vendors in the GPON space, Tellabs has so far resorted to selling its customer premises gear at negative margins, a situation it is working to correct but a tenuous one nonetheless. Likewise, Tellabs’ success in selling its reconfigurable optical add/drop multiplexer platform to major carriers is tainted by the fact that it isn’t profiting much on that gear, either -- another problem to remedied in time.

More than once, I’ve heard Tellabs CEO Krish Prabhu brag about the “beachfront property” of his large carrier accounts. But whenever he boasted that way, he seemed more like a man who’s eager to sell the place than one who’s relaxing in the sand and enjoying the view.

E-mail me at ed.gubbins@penton.com.