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Technology Stocks : Nortel Networks (NT)
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To: Slim Pickens who wrote (588)8/7/1998 12:04:00 AM
From: Paul Fine  Read Replies (3) of 14638
 
The Bay proxy statement came in the mail today. The date for the special shareholders' meeting is 8/28/98. If approved at that meeting, and no regulatory hangups, the merger will finalize three business days later. Although the merger agreement allows Bay to consider a "Superior Proposal", any interested/viable parties have already either been approached by Bay or have had ample time to come forward. This merger is a done deal.

I am disappointed at the market's reaction to this inevitability, with Bay/NT failing to rally with the rest of the tech stocks the past few days. NT just does not seem to generate the interest(low volume, particularly as a percent of outstanding shares relative to Bay's comparable situation) among the big players. On the other hand, we still see a fair amount of price volatility in NT(unfortunately, all on the downside since the day after earnings came out).

Still, this deal simply seems to be viewed cautiously by the Street; concerns about whether two second-place companies(vs their leading competitors, cisco and lucent) combined can make a first-class competitor, or just a larger second-place company. They need to move quickly and smartly to show everyone that this IP strategy can be executed successfully. Another botched "merger of equals" ala SNPX/WLFT will put a stake through this merger's heart.

Naturally, all the above commentary is just IMO.

Paul
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