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Technology Stocks : BAY Ntwks (under House)
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To: Bosco who wrote (6363)6/9/1998 3:03:00 PM
From: rupert1  Read Replies (1) of 6980
 
Frank: I, too, used to post on the fundamentals and the movement of the stock price. But the casino atmosphere is not for me.

If one was from another planet and knew nothing of the background but just looked at the share price - the pattern this quarter is eerily like last - lots of up and down movement between 23-28, then a relatively rapid move up to 32 with a pike to 34/35 and a fast turnaround and free fall to 25/26 before earnings and an intraday fall to 21 after earnings.

After the last earnings, I said it would return to 25-28 in May and that takeover talk would intensify espescially in the period between August-October. Obviously the takeover talk began almost immediately.

As for fundamentals - House promised a 10% sequential rise in revenues and I thought he was hedging a lot in his CC. There has been precious little evidence for or against good results this quarter - we are entering the warning season. If the figures are good, but not stunning, the stock price already reflects them and the improving prospects will take some of the steam out of the takeover talk. If the figures are bad then after an intial plunge the takeover talk will start up again. It has become trading stock par excellence. Fundamentals appear almost irrelevant.

Have any of you considered what will happen if everybody gets taken over except BAY? It has been argued that LU would prefer ASND or a foreign partner. NT cannot afford BAY. Intel will not deviate from its core market. CPQ is busy with DEC.

I am well aware that - like the man on CNCB said last night - just about everybody in the market expects a takeover soon - but I cannot find any evidence for that. If it is inside information then I am not, by definition, an insider. At the moment you would have to buy because everybdy else is buying - it may be right to do so - but it offends my reason. I dont like to walk the tight rope without a net. There are lots of other good stocks in the market. CPQ will get you another 3-8 points much more safely. So will CA. I would buy BAY when and if it return to 23-25. Meanwhile, I like Bosco, am still interested in the BAY fundamentals and look forward to the news which has been obscured by all the fever.

Victor
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