BAY Ntwks (under House) Message Board

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Technology Stocks : BAY Ntwks (under House)

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To: George A. Roberts who wrote (5709)	5/10/1998
From: Filippo Zucchi	Read Replies (2) of 6980

On Th. or Fr. (can't remember) DLJ issued a research note to its clients stating that based on a meeting b/w DLJ/BAY at the (Interop ?) convention, DLJ had reason to believe that BAY would soon announce a major strategic alliance with a leading telecom equip. maker (not a merger) believed to be Lucent. DLJ also said that BAY is working on a blockbuster product to be released in calendar 4th qtr. of 1998. I checked w/ my broker's technical and options desk and they told me the following: stock in under enormous accumulation and option activity is highly unusual. While the could not confirm whether the option activity was related to the stocks action (i.e. buy/writes, hedging, etc.) their sense was that it was not and that people were placing unusually risky bets on BAY's options. However, they noted that options implied volatility, while high, was not of the type usually seen in pre-takeover activity. Open interest in the May 25 calls, however, is enormous by normal standards. I'm not sure what to make of it other that I probably would not want to be short calls by the time the LU 10:30 audio conference comes around on Mon. If BAY is the 2nd half of the story it could be costly. Hope this helps.

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