After Ocular Buy, Tellabs Ready To Grow Again Targeting City Network Gear Sales of current products, which mainly handle voice, are dropping off quickly.(INTERNET & TECHNOLOGY)

Byline: MIKE ANGELL

Telecom gear maker Tellabs Inc. wants to get sales and earnings growing again. So it's hitching its fortunes to a hot market: telecom equipment for city networks.

Sales are slowing for Tellabs' flagship product, a device that splits telecom bandwidth into smaller slices. And so far, its newer products have yet to make inroads with its big customers.

An acquisition could offer a boost. Tellabs put its stash of cash to work by buying start-up Ocular Networks, which makes networking products that carry both data and voice within cities. Most of Tellabs' current products handle just voice.

The Ocular purchase is the right thing to do, says Ted Moreau, an analyst at Robert W. Baird & Co. "They have a billion in cash and what's it earning? Four percent?" he said. "An acquisition would boost those returns."

Streamlining City Networks

Like its peers, Tellabs is betting telecom carriers will spend money making urban networks more efficient. The main aim of gear makers is to unite many types of networking and telecom gear in one box.