Gary,
Great riposte...
Betting on takeovers... is a risky and speculative endeavor. At $28, Bay is up from its $21.18 low in April, but still well below its 52-week high of $41.87.
Its interesting that people get so wrapped up in the 'winner takes all' strategy - stockman is not alone in this. The multiservices marketplace will be quite different from the data only world. First its a LOT bigger. I read a report somewhere (from an SI lead) that stated that the entire data world, including hosts and software, was a $600 billion business last year, but that telecommunications (incluiding services) was over twice that.
Today no one company dominates telecom. Lucent and Nortel look dominant, but thats a US centric view. There are also Alcatel, Ericson, Siemens, Nokia, NEC and Fujitsu. These are not small companies.
The US techie centric side of me sees a future where Cisco, Lucent and Nortel may create a dominant combined marketshare (combined ~75%), but a few percent of a multitrillion dollar business will feed my kids :-)
The long term winners that I see are:
Cisco 35-45% worldwide marketshare
Lucent 20-30%
Nortel 10-15%
European Company 5-10%
Japanese Company 5-10%
To get to this point what do the 'big three' need?
Cisco - continued small technology purchases to bolster R&D
- maybe buy a european firm when they hit rock bottom
Lucent- continued medium sized purchases to bolster data R&D
- buy Nokia or other GSM vendor
Nortel- continued technology purchases, but if it wants to compete
level with the other 2 it will need to buy marketshare
in data. This is where BAY and Ascend rumors come from.
The wildcard is one of the European firms (Ericson) getting 'it' and deciding to act faster than Nortel.
Of course I could be biased (since I work for cisco :-)
John
ps What happens to Bay and Ascend if they hold out on Nortel and Ericson and October 1st comes and Lucent DOESN'T call? |
