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."
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