Maverick,
I really could kick myself. After having researched scores of news articles on CPQ last night (some of which I posted...you might look through my profile for the CPQ/NETWORKING articles), it became painfully obvious that CPQ will enter the networking sector through acquisition. It is hardly a "dark horse" suitor when one just looks at its actions and expressed intentions:
As one of these articles noted, CPQ intends to be a $40B company by 2000. That will necessitate acquisitions in an industry with fast revenue growth. The internet is the obvious focus.
As several of these articles noted, CPQ intends to be a major player in networking. Microcom is small potatoes compared to what CPQ needs to make a big revenue splash in this field. It needs an ASND or a COMS or some such entity (or more than one).
Of course, as CPQ itself explicitly stated in a 14-C filed October 20 or 24, it seeks authorization for an additional 2Billion shares for the very purpose of, among other things, "acquiring businesses."
Some time ago, you had suggested that ASND/COMS would be a good fit. That being the case, is CPQ/ASND/COMS too much to grab in one fell swoop? In the alternative, what would be the consequences of not doing so? (For example, the competition might be terribly fierce were CPQ to acquire COMS but leave ASND be, only to see it swallowed up by a LU on the attack, resulting in greater pressure on margins down the road.)
If you were CPQ and could cherry pick either ASND or COMS but not both, which of the two entities would you prefer to acquire, and why?
You don't need to respond, but it seems to me that if we can determine CPQ's best approach toward meeting its $40B target, we can make a more educated guess as to how likely a CPQ/ASND combination might be.
Gary Korn |
