Gary (gbh),
Do you still feel strongly that LU will buy ASND? If not, then who will? I currently think INTC, Alcatel, Nokia, or IBM are most likely. But I haven't ruled out ASND deciding to go it alone; I just don't like this idea as a shareholder.
I don't know if I feel strongly, but I do believe it is a strong possibility. A post by djane indicated LU has a $30B budget once Oct 1 passes--who are the candidates? I doubt very seriously they would consider 3Com. That leaves BAY and ASND, and they could very well take both. BAY is strong in LAN products and ASND is strong in WAN products. If I were LU, I'd offer $6B for BAY and $12B for ASND (current market cap is about $5B and $8B respectively).
Livingston by no means rules out a LU acqusition of ASND. Their new carrier-class RAC is new and unproven, and will have a very difficult time dislodging ASND from the installed base. It's really a lot of trouble for ISP's to change vendors. LU could really use ASND's market share in RAC's.
But the real gem for LU is the ATM switches. LU lu sts for Cascade. They MUST have it. They MUST MUST MUST have it!!! Lucent is a switch vendor. This defines the heart and soul of Lucent. Their bread and butter is the 5ESS and other voice switches & PBX's, all of which will be obsolete in a few short years. It would be totally unacceptable for Lucent not to have dominant switching products for the next era. Today, Lucent does not have a carrier-class ATM switch. The one they are selling to carriers is OEM-ed from GDC.
That doesn't mean they will necessarily buy ASND. They could buy FORE or GDC. But the service providers clearly want Ascend's switch, and so I think ASND is at the very top of LU's shopping list.
So why did LU buy Livingston and Yuri? Perhaps because Mory's price tag is too high for LU at the moment, and are waiting for the pooling of interests restrictions to be lifted on Oct 1. Perhaps LU is trying to scare Mory into lowering his price. Perhaps LU wants to get their toes wet before diving into the datacom pool. There are many possibilities. But Ascend, more than any other company I can think of in the $12-30B price range, would be the very best way for LU to fully enter the Internet equipment market.
BAY is a candidate, but not quite as good as ASND. BAY is strongest in LANs and commodity networking products. I think LU would be uncomfortable with BAY's margins--LU is used to charging premium prices. LU is used to selling expensive products for the core of carrier networks, while BAY sells commodity products to the enterprise/small office market. IP technology has been commoditized, and IP equipment vendors are a dime-a-dozen. Why do they need BAY? BAY is not a leader, and they haven't demonstrated the innovative vision that companies such as FORE, ASND, CSCO have shown in their respective product specialties. Just my opinion.
bucky89 [ducks, hoping there are no BAY fans on the thread] |
