[3/10/98 Bloomberg article "Phone Equipment Makers, Networking Companies Seek Acquisitions." Discussion of LU/NT acquisitions plans]
(from Moonray on the COMS Thread)
exchange2000.com
Phone Equipment Makers, Networking Companies Seek Acquisitions
San Francisco, California, March 10 (Bloomberg) -- Lucent
Technologies Inc., Northern Telecom Ltd. and other makers of
telephone equipment are likely to buy a number of privately-held
companies this year to gain access to the same markets targeted
by Cisco Systems Inc. and other computer networking companies.
Leaders in both industries are looking to expand the product
lines they sell to phone companies and Internet service
providers, said financial analysts at a networking industry
gathering in San Francisco. Today, for example, Cisco said it
will buy closely held NetSpeed Inc. for about $236 million in
stock. Austin, Texas-based Netspeed makes so-called digital
subscriber line products that speed up the transmission of
information over regular copper phone lines.
The battle for the so-called carrier market is expected to
develop as phone companies spend more on equipment that lets them
increase their Internet-related services. Annual spending on such
equipment, some of which is still being developed, could reach
$40 billion a year by 2000 as telecommunication carriers expand
their networks to handle burgeoning Internet traffic.
''Telecom equipment makers have to compete in this part of
the network,'' where voice and data communications come together,
said Paul Johnson, an analyst with BancAmerica Robertson
Stephens.
Rather than spend large amounts of time and money to develop
their own technology, Lucent, Nortel and others will purchase
smaller companies who are already working on it, Johnson and
other analysts said.
Lucent has already bought two networking companies within
the past six months. Last week, Northern Telecom said it would
buy at least one within the next six months.
The acquired companies almost certainly will include several
of those making their pitch to venture capitalists and investment
bankers at the Network Outlook conference this week in San
Francisco. Among the startups mentioned most often by analysts as
takeover targets were Juniper Networks Inc. of Mountain View,
California; Avici Systems Inc. of Chelmsford, Massachusetts; and
Torrent Networking Technologies Inc. of Silver Spring, Maryland.
While the growth of voice traffic carried over the public
phone network is relatively flat, data traffic has exploded. As a
result, sales of data networking equipment have grown three times
as fast as phone equipment sales.
''We see the biggest opportunity in data, not voice,'' Lewis
Wilks, president of business markets for Qwest Communications
International Inc., told the conference.
Qwest, which provides communications services to businesses,
consumers and other telecom carriers, is constructing a
nationwide fiber-optic network which it expects will be carrying
mostly data traffic, Wilks said.
Investments in new technologies and products by the telecom
companies will result in faster, cheaper communication services
for businesses and consumers, said Scott Heritage, an analyst
with UBS Securities. Better management services for computer
network managers and free phone calls over the Internet are just
two of the likely improvements.
''The demand is not quite there yet, but within a few years
you'll be able to make phone calls over (Internet) networks,''
Heritage said.
o~~~ O
| |
