Tellabs Inc. (TLAB)

[Pedro2004]

LOL ... was I off on this one.

This morning I couldn't understand what was happening.

But now I know.

The Ex-date on the dividend was not today -- it is on Dec 24








UPDATE: Tellabs's Early Stock Trading Roiled by Dividend-Date Confusion

Last update: 12/12/2012 7:50:30 PM

By Matt Jarzemsky and Ben Fox Rubin

Confusion about a special dividend being paid by Tellabs Inc. (TLAB) sparked stock swings in heavy premarket trading of the company's shares Wednesday.

Traders said some market participants likely mistook Wednesday for the so-called ex-dividend date. Prior to the ex-dividend date, shareholders in Tellabs, which is listed on the Nasdaq Stock Market, are eligible to receive a recently announced $1-a-share, one-time payout. Buyers of the stock on or after that day aren't eligible.

Dec. 24 is the ex-dividend date, according to Nasdaq OMX Group Inc. (NDAQ). That's because Tellabs's $1-a-share payout is greater than 25% of the recent value of the stock, making it subject to a special rule that allows investors to remain eligible up until the date the dividend is paid.

But traders said some market-data providers indicated Wednesday was the ex-dividend date. Several news outlets distributed the erroneous information, causing confusion in premarket trading, said Tom Scottino, Tellabs's senior investor-relations manager.

Typically, a stock goes "ex-dividend" at a predetermined time before the day the company distributes the payments.

In a late-November press release about its dividend, Tellabs had said shareholders of record as of Dec. 14 would be eligible. Because trades take three days to settle, that would have made Dec. 12 the ex-dividend date had the rule about large dividends not been enforced.

"A bunch of people had assumed you had to buy the shares before the 12th [to be eligible for the payout], and Nasdaq had originally advertised that you had to buy the shares before the 12th," Mr. Scottino said.

A Nasdaq spokesman declined to provide details on the company's efforts to alert market participants to the dividend's timing.

Nasdaq did alert market participants the ex-dividend date is the 24th on Tuesday, using its Daily List product, a feed of information on new listings, dividends and other corporate actions that Nasdaq offers for a fee, the exchange group said in a note to customers Wednesday afternoon.

Reaching the ex-dividend date could drive a stock price down, as shares thought no longer to convey the rights to the payout would be less valuable.

Tellabs stock dropped to as low as $2.35 in premarket trading, down 30% from its previous closing price, before rebounding, according to FactSet. Stock exchanges reviewed some trades for potential cancellation but ultimately let them stand.

"A lot of the data sites still had the ex-dividend date listed as today," said Larry Peruzzi, managing director at Chicago brokerage Cabrera Capital. "People, preopen and shortly after the open, were trading on the belief that this thing should have been trading down, because they thought it was ex-dividend, and it wasn't."

Shares of Tellabs, a networking-equipment company, fell 0.9% to $3.32 Wednesday.

Write to Matt Jarzemsky at [e-mail] and Ben Fox Rubin at [e-mail]

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(END) Dow Jones Newswires

December 12, 2012 19:50 ET (00:50 GMT)