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Updated from 7:40 a.m. EST

Investors frowned on a reported transcontinental takeover deal between French telecommunications supplier



and Canadian telecommunications and data networking company

Newbridge Networks



Shares of Alcatel fell 3 7/16, or 7%, to 48 1/8, while Newbridge shares dropped 2 1/4, or 6%, to 33 1/8 in early trading. (Alcatel fell 4 3/16, or 8.1%, at 47 3/8. Newbridge fell 2 5/8, or 7.4%, at 32 3/4.)

Citing people familiar with the situation,

The Wall Street Journal

said Alcatel would offer more than $6.5 billion in stock for Newbridge. The French company bought two American data networking companies last year in an effort to modernize its offerings. Newbridge's products serve both broadband and traditional wiring systems.

Sarah Miller, spokeswoman for Newbridge, declined to comment, as did Klaus Wustrock, spokesman for Alcatel, who added that the company never comments on rumors and speculation.

Newbridge is expected to report earnings of 11 cents a share for the quarter ended Jan. 31, according to a poll of analysts by

First Call/Thomson Financial