Larry, a buyout by Lucent would be great, but improbable. Lucent is a $16 Billion company ( they were only $10 Billion when they were spun off from AT&T). Lucent management would most likely look at DLGC and figure that if a small $300 million company has 0% market cap growth in 3 years, that it would not be worth the risk.
It has long been said that small capitalization companies have greater growth potential than large cap companies. It is not hard to figure out why. It is much easier for a $100 million company to add 30 million to its market cap (30% growth), than it is for a $10Billion company to add $3 Billion to its market cap, although both would represent 30%. I am sure Lucent management would laugh at DLGCs performance.
Then, on the other hand, one could argue that Lucent would see this as a diamond in the rough. Here is a company with leading market share, a VAR channel that believes its products are the best, yet, total return to shareholders in 3 years is 0%. The key is that the management would have to buy the company and clean house.
I did see a recent article in Network World which quoted a Lucent engineer as saying that they were currently conducting a "bake-off" between DLGCs and Natural Microsystems voice cards for a new generation of products. Whoever gets that award will likely emerge as the winner, and would be the most probable candidate for a Lucent takeover, if any.
One last note on Lucent....due to accounting reasons, they are not likely to make any acquisitions until 1998 (recent article, can't remember the source, but it is out there).
Larry, since you have not lost money in this company, I do not blame you for getting out (I would do so in a heartbeat). For me, I will hang on for the 5% chance that Lucent will use their boards, the 1% chance that Lucent would be interested in the company, the 1% chance that Rockwell would be interested in the company, and the 3% chance that someone else would. That gives me a total of a 10% chance of getting my money back. Not good odds, but the time and energy expended on this company cannot be returned any other way. Sort of the proverbial "sink with the ship" thing. |
