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First, I've got to admit that this is the one that I know the least about. I picked it because it intrigued me and because I think telecom is an important part of the future.

Tellabs -- According to my calculations from the most recent 10Q, they pass all the numerical CK criteria, other than the flow ratios.

Gross Margin -- 63.3%
Net Margin -- 20.8%
Leveraged Flow -- 1.55
Unleveraged Flow -- 1.55
Cash/Debt -- 210.7

The one thing that does make this one difficult to evaluate and recommend is the recently announced merger with Ciena. Large mergers of high tech companies do not seem to have a great track record.

The stock's performance over the years certainly speaks for itself.

Personally, I like the direction as well. EPS has grown by more than 64% over the last 5 years and is expected to grow just over 30% over the next 5.

Biggest shortcomings of this one is that they have a somewhat "heavy" business, and they fall a little short on the flow ratio side of the equation. I like the fact that they don't seem to carry a lot of inventory either.

Phil

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<<First, I've got to admit that this is the one that I know the least about. I picked it because it intrigued me and because I think telecom is an important part of the future.

Tellabs -- According to my calculations from the most recent 10Q, they pass all the numerical CK criteria, other than the flow ratios.

Gross Margin -- 63.3%
Net Margin -- 20.8%
Leveraged Flow -- 1.55
Unleveraged Flow -- 1.55
Cash/Debt -- 210.7>>

The only reason I left this off my list was the flow ratio. I had thought it was 3.3, but I forgot to include the short-term investments as cash. Phil's number's are right, and this make Tellabs a much more credible candidate.

Tellabs is setting itself up to be a key player in the coming expansion of the coming explosion in internet bandwidth. This promises to be a hypergrowth market and it is one that the CK portfolio would do well to invest in.

Al
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Isn't Tellabs a Cash Prince? Sales just barely over l Billion. Not exactly a household name or a gorilla. Future growth dependent upon acquisition of data networking companies to compete with Cisco and Lucent? No doubt it has potential, maybe greater than the others but is it a CK yet?

Rich
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The one thing that does make this one difficult to evaluate and recommend is the recently announced merger with Ciena. Large mergers of high tech companies do not seem to have a great track record.

Well, I have a good contact who is an engineer at Ciena. Just talked to him and pretty much everyone there is very bullish on the merger with Tellabs. They expect good things to come from it.

I would mostly be concerned with them chasing the giant that is LU, but from what I understand Ciena's bit of this is quite a bit more advanced than anything LU has. Of course, my information has been fairly one sided :).

Has anyone considered purchasing the cheaper of the two companies (Tellabs and Cienna)? The merger, which doesn't appear to be facing any hurdles, is a 1:1 stock trade. Picking up the cheaper of the two (currently Ciena, and likely to stay that way) might be a strategy. Of course, if the merger fell through for some reason, Ciena shares are going to tank. It's been a very volitile stock traditionally and is pretty close to the 52-week high right now.

Zathrus
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