BAY Ntwks (under House) Message Board

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Technology Stocks : BAY Ntwks (under House)

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To: Paul Fine who wrote (5105)	4/6/1998 3:39:00 AM
From: rupert1	of 6980

Paul: I understand your arguments and the logic is fine (no pun intended). The issue is the premise. If I can simplify it, your main premise is that the BAY forward view may be inferior to the SV forward view because the SV view is three weeks later. (Adam Hefian would add that the BAY forward view has an intentional optimistic bias to cover for the deficiencies of the forward view that BAY had for the 3rd quarter). You propose a minor premises that the SV forward view must have been based on a verifiable survey. We don't know when the SV survey was taken, or what the date of the data was that was reported. You may be wrong to assume that it reports data three weeks fresher than the BAY's data. You don't know whether the survey was comprehensive. For all the factors you enumerated, prognosis of new product sales may be as difficult for SV to survey or its informants to measure as you suggest it is for BAY. On the other hand, BAY ought to have a more comprehensive view of the entire market and ought to have indications about future sales not available to SV or its informants. The nub of your fear seems to be that BAY under House will make the same good faith errors as BAY under Ludwick (Adam would replace the "good faith" clause with "bad faith"). You are fearful that sales of Accelar may not only be much slower during the 3rd and 4th quarter but may never catch on sufficiently due to Cisco dominance. I still think the weight of the evidence and the logic is with BAY. I would very much like it to say in the CC that sales of Accelar have picked up in the first two weeks of April but I do not think it as critical that they do, as you seem to. I could envisage a statement to the effect that lead time is longer than anticipated, but that sales and demonstrations have picked up and are expected to accelerate through the next two quarters. I agree that this will be relatively weak and render the stock vulnerable to speculation by the Street but I would not expect it to cause a serious meltdown in the share price. I would see volatility in both directions. No doubt we will all be watching carefully before earnings and any news may be critical for both our points or view. Victor

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