Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 205.50

-1.5%

Dec 5 9:30 AM EST

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To: Maverick who wrote (34590)	2/13/1998 11:48:00 PM
From: Chuzzlewit	of 61433

Maverick, the answer is in your question. Synergy means more than simply the sum having greater value than the parts, because that could be achieved by just cutting G&A expenses. Synergy implies things like technological leaps because each partner may be in possession of a different component that together may be required to overcome a technical problem. It may also mean more efficient selling because of product fits and cross selling. The result of this is that each partner to the deal is able to accelerate earnings. The real problem comes when you try to calculate the expected growth rate of the combined entity. Simply blending the expected growth rates on a capital-weighted basis doesn't work because it neglects the synergy. So the answer depends on what the estimated growth rates of the combined company would look like when synergies and economies of scale are factored in. Regards, Paul

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