TD Securities report. LU/ASND acquisition discussion
(via NN thread)
To: CJS (4647 )
From: CJS
Thursday, May 28 1998 2:13PM ET
Reply # of 4666
This is an exerpt from Investors Digest, quoting from TD Securities.
Reads as follows...
How to play the networking industry mergers
Buy Northern Telecom, 3Com Systems and Newbridge Networks to take advantage of
changes in the industry.
(From a recent report by analysts David Beck and Paul Litva)
The telecom and datacom industries have historically been separate. We believe they will consolidate into a "networking industry" as technologies, markets and companies merge.
As part of this consolidation, we expect mergers and acquisitions involving major telecom and datacom companies to take place over the next 12 months. The companies most likely to be affected by this include Northern Telecom Ltd.(Nortel), Lucent Technologies Inc., Cisco Systems Inc., Newbridge Networks Corp., Ascend Communications Inc., 3Com Corp. and Bay Neyworks Inc.
There are three primary drivers of these mergers and acquisitions.
1) The recognition by major telecom vendors that future communications networks will be datacentric or based on packet technologies.
2) The emergence of Cisco as a datacom superpower. Other major telecom and datacom players now recognize the threats this company represents.
3) The advantage that major telecom vendors have in their longterm relationships with existing carrier distribution channels.
If the activity in telecom services or the financial industry provides any guidance, the share prices of all these companies could rise based on speculation about mergers and acquisitions.
Investors should buy shares in the companies most likely to be acquired - perhaps with a basket approach. These companies are (in order of highest to lowest probability) Ascend, 3Com, Newbridge and Bay Networks. We believe that Lucent will acquire at least one of these companies to beef up its datacom products and channels.
Futhermore, Siemens A.G. may attempt to "acquire Newbridge" as other events in the industry unfold. 3Com could merge with or acquire Newbridge with the objective of building a stonger product portfolio and channel capability to compete with Cisco, Nortel and Lucent. This would add value to both 3Com and Newbridge.
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Thought this might be of interest to everyone.
Regards... |
