Re LU/ASND from Street.com:
SAN FRANCISCO -- Immediately after Ascend Communications' (ASND:Nasdaq) breakout session at the NationsBanc Montgomery Investment Conference, the stock sold off hard, dropping as much as $2 per share in little over an hour. So what gives?
The big question about Ascend these days isn't so much how it's doing, but how long it can stave off a merger. The Alameda, Calif.-based data communications equipment maker has been voted by the Street as "Most Likely to Be Bought by Lucent (LU:NYSE)". After Oct. 1, Lucent will be cleared to make stock-swap acquisitions, which allows it to go after big fish like Ascend.
Instead of top executives who could tackle the Lucent talk head-on, Ascend's representative at the conference was its top PR man, Bernie Schneider, who rehashed details of the company's proposed $948 million acquisition of Stratus Computer (SRA:NYSE). But in the breakout session, Schneider was asked why CEO Mory Ejabat wasn't there to present. "He's traveling," said Schneider. "Traveling to Lucent headquarters?" asked a fund manager, only half joking. But Schneider said Ejabat was not visiting Lucent, and that's when the stock started selling.
Yesterday, during the Dow's 216-point drop, Ascend gained 2 5/8 on buying frenzy over a Lucent deal. This gained some credence -- especially after Lucent made some comments about its need for ATM switches that had some investors believing that Ascend was a probable acquisition target. But today, after Schneider's comments, the deal may now seem less likely.
"In a way, I'd rather not see it taken out, since they have such great prospects," said Paul Siegel, president of San Francisco-based Hollis Capital Management, which has held Ascend stock for several years. "But it's hard to see how either Ascend or Newbridge Networks (NN:NYSE) can stay independent. Lucent has to get into the data area and October 1 is fast approaching." |
