Redback (RBAK) was up 5.7% in midmorning on speculation that it could be Alcatel's (ALA) next acquisition target.

The Internet infrastructure provider has been thought to be a takeover target, and with the

Lucent

(LU)

deal out of the way, Alcatel seems the most likely buyer.

While acknowledging that it expects consolidation in the telecom equipment sector, Alcatel late Tuesday denied that it is looking for a merger or acquisition. Alcatel was down 7.3%.