Tellabs Inc. (Nasdaq: TLAB- message board; Frankfurt: BTLA) is still in talks with potential buyers and the latest name to join the party is Nortel Networks Ltd. (NYSE/Toronto: NT - message board), Light Reading has learned.

    Tellabs is seen as a solid technical fit for Nortel, according to sources close to both companies, and one Light Reading source on Wall Street says Nortel is ready to make an offer in the range of $14 to $15 a share.

    Tellabs was up $0.14 (1.38%) to $10.25, on below average volume, in trading on Wednesday, giving it a market value of $4.5 billion. Nortel was up $0.08 (0.46%) to $17.60.

    Nortel, which missed out on Avaya earlier this year, has been on the hunt for a way to expand its businesses now that its financials have stabilized. (See Nortel: Kissing Avaya Goodbya? and Nortel's Z-Man Hints at M&A.)

    Tellabs, the central figure in nearly every telecom M&A rumor this year, was reportedly close to being snapped up by Nokia Siemens Networks in July. (See Is Nokia Siemens Tailing Tellabs? and Tellabs Mum on M&A Talks.)

    Our Wall Street source indicates that the Nokia Siemens talks are ongoing, but Nortel is throwing its hat in the ring as well. And, for Nortel, that's one way it can bring back the scale and sway it once had in North America, before years of cost cutting took its toll.

    "A real turn around will need renewed revenue growth, and [Nortel's] various initiatives on this front could take years to come to fruition (if ever)," wrote Deutsche Bank AG analyst Brian Modoff in a note to clients issued Aug. 2.

    The Tech Story

    Sources close to both companies say the technology story of a Tellabs/Nortel combo would be fitting. "There's almost no product overlap and the ROADMs that Tellabs has could help Nortel modernize its optical networking story -- maybe giving it something to upsell to its old Optera customers," says one source.