Global Crossing's New Frontier: A Lower Stock Price

SAN FRANCISCO -- Global Crossing (GBLX) and Frontier (FRO) - Get Report are getting together, but their shares are going their separate ways.

Bermuda-based Global Crossing, a fiber-optic provider, agreed to buy Frontier, a long-distance and local carrier, for $62 a share, or $11.2 billion in stock. The companies said the merger would create the first owned and operated global Internet protocol-based fiber optic network able to provide customers with integrated worldwide Internet, data, long distance, local telephone and conferencing services.

TSC

columnist Herb Greenberg broke the story

Tuesday.

In light of the deal,

Goldman Sachs

analyst Richard Klugman cut his rating on Global Crossing to market outperform and removed it from his recommended list. But Klugman told

TheStreet.com

that he "likes the deal a lot" and remains positive on Global Crossing; he just thinks the company will need to take "a bit of a pause here" as it absorbs Frontier. Klugman compared the deal to the acquisition by

Qwest

(QWST)

of long-distance carrier

LCI International

last year. Qwest also took a hit before the deal paid off, Klugman said.

Global Crossing was off 4 1/2, or around 9%, at 47, while Frontier was up 7 9/16, or 17%, at 52 3/16.

What's Up?

Shares of

Novell

(NOVL)

were higher after

Merrill Lynch

upgraded the stock to long-term buy from accumulate with a price target of 30. Merrill kept Novell at near-term accumulate. Novell was up 1 7/8, or 7.8%, at 25 15/16.

Also on the rise is

Progress Software

(PRGS) - Get Report

, which beat earnings estimates Tuesday. Progress reported earnings of 35 cents a share, easing past the 28-cent-a-share estimate from

First Call

. The stock was up 4 1/4, or 14.6%, at 34 1/4.

Shares of

Real Networks

rose on news of a linkup with

Microsoft's

(MSFT) - Get Report

Internet Explorer. RealNetworks was up 14, or 12%, at 129.