Shares of Xylan Corp. rose 14% Monday amid speculation that the maker of sophisticated computer-networking equipment may be acquired by a large telephone-equipment maker such as Alcatel SA.
Xylan climbed 2 3/4 to 22 5/8 in trading of 3.1 million, more than twice the three-month daily average. The shares have climbed 23% since Wednesday.
Xylan, based in Calabasas, sells computer switches that large businesses use to link computers to corporate networks and the Internet. Xylan's fourth-quarter profit rose 67% on surging sales, making the company an attractive target for Alcatel, Europe's No. 2 phone-equipment maker, which is looking to sell more data-networking gear.
In the fourth quarter, Xylan got more than 10% of its $97.4 million in revenue from sales to Alcatel, which has a minority stake in Xylan.
Douglas Hill, vice president of corporate communications, said the company "feels its stock is undervalued" and would be willing "to look at any reasonable way to increase shareholder value."
"There was a perception in the past that we wouldn't entertain any [takeover] offers, but we've made it clear since October that we're focused on shareholder value," Hill said in an interview.
He declined comment on any possible talks with Alcatel.