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Technology Stocks : BAY Ntwks (under House)

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To: Bosco who wrote (6565)	6/16/1998 1:02:00 PM
From: Kenneth E. Phillipps	of 6980

I just noticed that share of BCE in Nortel will shrink from 51% to 41% when the deal is completed. June 15, 1998/FOOLWIRE/ -- Networking products company Bay Networks (NYSE: BAY) gained $2 7/16 to $30 3/4 after ending months of speculation by agreeing to merge with telecom equipment company Northern Telecom (NYSE: NT) in a deal valued at about $9.1 billion. Each Bay share will be converted into 0.60 of a share of Nortel stock, valuing Bay at $38.21 per share. Bay shareholders will end up owning about 21% of the combined entity. Nortel said the deal will be dilutive to its fiscal 1998 earnings and slightly accretive to fiscal 1999 earnings. The key to the purchase appears to be Bay's Internet-related products, which Nortel hopes to leverage into "substantial" revenue growth down the road. A skeptical market knocked Nortel's shares down $9 7/16 to $54 1/4. BCE Inc. (NYSE: BCE), which will see its 51% stake in Nortel sliced to 41% once the deal is completed, lost $2 1/16 to $42 5/8.

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