Advanced Fibre Finds 'Sweet Spot' With Tellabs

Advanced Fibre Communications (AFCI Quote) has found a partner to sharpen its broadband edge.

Shares in the Petaluma, Calif., telecom gearmaker surged 13% Thursday after the company agreed to be acquired by phone-equipment rival Tellabs (TLAB Quote). The $1.65 billion cash-and-stock deal will create an equipment manufacturer catering to the needs of the nation's big local phone companies such as Verizon (VZ Quote), SBC (SBC Quote) and BellSouth (BLS Quote).

Analysts say the deal fills a hole for each side. Tellabs is a big supplier of old-line gear for the regional Bells, but it had little by way of new products to continue that success. AFC has compelling broadband access equipment, but it has lacked the scale the Bells require in terms of technical support and installation hand-holding. ...