Raymond James notes
Our present viewpoint is that Ascend is experiencing a transition year much like Network General. Similarly, when NETG dropped to $11-$12 in July, we rated it a BUY (1) in the belief that the stock price was reflecting excessive investor despondency owing to the realization that the financial performance of the current fiscal year would be well below estimates. Since Raymond James was the first to lower the estimates, we could more readily discern that Fiscal 1998 could be a transition year ultimately leading to restoration of attractive growth. Only four months later, NETG has nearly doubled in stock price and has announced plans to be acquired by McAfee.
Similarly, owing to the consolidation increasingly evident in the networking industry, we believe that Ascend could well be a takeover candidate. As noted, Lucent's plan to acquire Livingston is just one factor evidencing the trend. Organizations with a potential interest in obtaining a company with Ascend's capabilities might include Siemens, Nortel, IBM, Fujitsu, and NEC, among others. Ascend's full line of networking products could be attractive assets for any one of these companies if they are seeking a more vigorous participation in the market for enterprise networking and the conversion of the PSTN into packet switching technology. Last week there were even unconfirmed reports (on Reuters) that Lucent may be interested, even though it just announced the acquisition of a smaller Ascend competitor. |
