July 30, 2010 / 5:09 PM / 9 years ago

UPDATE 1-Tellabs shares fall on threat from Alcatel-Lucent

* Shares down 6.5 pct

* Alcatel-Lucent wins wireless backhaul deal with AT&T (Adds Tellabs comments, updates share moves)

NEW YORK, July 30 (Reuters) - Shares in network equipment maker Tellabs Inc TLAB.O were down 6.5 percent on Friday due to fears that it was set to lose business with top U.S. phone company AT&T Inc (T.N) to rival Alcatel-Lucent ALUA.PA.

Tellabs earlier this week warned of increasing competition, saying that while it and another company, which analysts presume was Cisco, were chosen as wireless backhaul suppliers to AT&T, a third party, seen as Alcatel-Lucent, was recently added as a trial.

On Friday, Alcatel-Lucent said it had won a deal with AT&T in wireless backhaul and would help it shift to a next-generation wireless technology called long-term evolution (LTE) from the current, 3G standard.

The Franco-American group, Cisco and Juniper Networks Inc (JNPR.N), on Thursday were named as domain suppliers, or key equipment vendors who work closely with the carrier to support its overall voice, video and Internet service.

“This news appears to be in contradiction to Tellabs’ comments earlier in the week that Alcatel-Lucent was only in trial for backhaul,” said J.P. Morgan analyst Rod Hall.

Hall said the impact could be material, considering that around 40 percent of Tellabs’ broadband data sales come from AT&T’s wireless backhaul network.

A Tellabs spokesman declined to comment on the nature of Alcatel-Lucent’s contract with AT&T. Tellabs supplies backhaul equipment for AT&T’s 3G network and was seeing good orders and demand, he said.

Tellabs also said it agreed to a partnership with Juniper Networks, through which it will sell products to AT&T.

Tellabs shares fell 48 cents to $6.91, down 11 percent from the previous week.

Shares in Alcatel-Lucent rose over 11 percent in Paris after the company reiterated its profit target for the year despite investors’ concerns it would need to trim it due to an industry-wide chip shortage. (Reporting by Ritsuko Ando; editing by Gunna Dickson)

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