BAY Ntwks (under House) Message Board

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Technology Stocks : BAY Ntwks (under House)

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To: Paul Fine who wrote (6431)	6/14/1998 6:40:00 AM
From: rupert1	Read Replies (1) of 6980

Paul Fine: Re: The "extra two weeks" so House did not say it but he agreed with the sentiment. But I heard House say in the last CC when asked whether the bulk of sales for the quarter had been in the last two weeks - he said "try the last week". Given this, it is difficult for me to see how they could have been projected such optimistic numbers until the beginning of March and still got it so wrong when they corrected in the second week of March. Re; The Street's reaction to whisper numbers - well what are the whisper numbers?. I have seen suggestions from analysts and brokerage houses - cannot remember the reference but it was published on this thread or on the Yahoo thread - that BAY will miss expectations. There have been a number of suggestion on this thread that they will meet or exceed. Re: Public companies statements about earnings; I don't think it is true to say it is normal that publicly quoted companies hedge their earnings guidance in the final month of a quarter to the extent that BAY appears to have done in the guidance given you, as cited by you. I think it is more normal for them to say that they are or are not comfortable with earnings expectations or they come right out and warn. Sometimes they warn on the basis of their knowledge of what the results will be and sometimes they warn precisely because they don't know due to the risk involved in back-end loading. Re: Interpreting House. I find it to be special pleading to blame analysts and investors for misinterpreting House. This CEO and Chairman of this publicly-traded company called a special meeting of analysts in New York to improve relations with the Street and then told them, two months before earnings, that he wanted and expected to reverse the historical pattern for the quarter and turn sequential losses into sequential gains. Nobody suggested that he did it deliberately - I said that it was ineptitude. Re: Streets reaction. I think that if BAY meets or exceed expectations - the share price will trade between 27-33; assuming positive expectations for future earnings, then the PE can expect to expand. The buyout price would move to a higher range. Possibly 38-43. I think this would make BAY a much more problematic acquistion target than it already is. The large number of institutional investors would accept anything over $36 but there are very few acquiring companies for whom BAY would be worth that money. Re; Takeover. If BAY tanks for any reason - missing earnings, hedging future forcasts, failing to convince a skeptical Street, or - to a lesser extent - as the result of an overall market correction - then it becomes a more attractive takeover target. I still think that the impetus for takeover will come from BAY itself because it cannot survive well in the long term without merging. In the process of taking such initiatives, it might well be that it becomes acquired. I think there are very serious questions about Lucent as an acquirier - although I could see an enhanced BAY/LUCENT partnership. I still think the most likely acquirer, if there is one, would be a foreign company which would pay a premium for BAY's installed US base. IMHO Victor

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