Index: lib/net/telnet.rb
===================================================================
--- lib/net/telnet.rb	(revision 16234)
+++ lib/net/telnet.rb	(working copy)
@@ -562,7 +562,8 @@
                Integer(c.rindex(/#{IAC}#{SB}/no))
               buf = preprocess(c[0 ... c.rindex(/#{IAC}#{SB}/no)])
               rest = c[c.rindex(/#{IAC}#{SB}/no) .. -1]
-            elsif pt = c.rindex(/#{IAC}[^#{IAC}#{AO}#{AYT}#{DM}#{IP}#{NOP}]?\z/no)
+            elsif pt = c.rindex(/#{IAC}[^#{IAC}#{AO}#{AYT}#{DM}#{IP}#{NOP}]?\z/no) ||
+                       c.rindex(/\r\z/no)
               buf = preprocess(c[0 ... pt])
               rest = c[pt .. -1]
             else