Hi Steve,
I have also used Bay as a trading vehicle fairly frequently, and have been following it for the past two years or so. I just don't see CPQ buying Bay at this time. Bay has repeatedly stumbled, they were in the teens after the east coast/west coast merger between Wellfleet and Synoptics was botched by Ludwig and Severino. They both stepped down and House was brought in from Intel. The stock popped from the teens up to 41, and Bay has dissapointed since that time, despite House's assurances that things are looking up. They missed the last quarter, but House is still saying their Accelar product looks promising. Anyway, Cisco still appears to be eating their lunch in the enterprise business, and I think CPQ management has enough on their minds right now dealing with DEC and the PC inventory problems, let alone taking on Cisco. Also, I think a takeover would have to be in the 5-6 billion range, which could turn out to be more than they pay for DEC once cash/fab sale/tax loss carryforwards are factored in. Bay has been rumored to be in play for over a year now, the recurring rumor was that Lucent would buy them...
John
The other thing is, CPQ just stated that one reason they were buying back stock was dilution, so why do it all over again? Also, I think the stock would take another hit with a buy like this, and hang question mark number two over CPQ's head as to how they could successfully integrate a double merger in different tech areas at the same time.... |
