8/6/98 ML survey of 50 MIS managers [Reference to acquisition of ASND]
(via NT thread)
To: Paul Fine (589 )
From: Kenneth E. Phillipps
Friday, Aug 7 1998 1:21PM ET
Reply # of 602
Copied from the Yahoo Messages Board
Survey shows approval
of NT and BAY merger
DoctorRVB
Aug 7 1998
12:58PM EDT
From Merrill Lynch (08/06/98)
This is the fourth in a series of surveys of 50 MIS managers. The purpose of the
survey is to identify industry trends and gain insight from purchasers of data
networking equipment. This report presents the results of our survey that was
conducted during July 1998.
Fundamental Highlights:
ú The growth in I/T budgets appears to be accelerating. About 77% of respondents who said their 1998 budget would be up said that the growth rate would be faster than 1997, while only 3% indicated the growth rate would be slower.
ú MIS managers surveyed have a high degree of confidence in becoming Y2K compliant by December 1999. About 80% of respondents indicated that they expect to be Y2K compliant (including testing) by June 1999, and 96% expect to be compliant by December 1999.
ú The survey indicates that there is a low risk that Y2K spending will negatively impact spending on data networking equipment. None of the survey respondents indicated that Y2K would displace spending on data networking equipment.
Investment Highlights:
ú As expected, Cisco was named as the data networking vendor of choice by a 2-to-1 margin over its closest competitor.
ú Survey respondents who use more than one brand of server OS prefer using Novell's Netware on their network servers because of its price, stability and
reliability.
ú The survey indicates that LAN switches (100 Mbps), high end routers, and remote access devices are the most highly price elastic data networking equipment. In the intermediate term, we expect continued price competition in the LAN switch segment, and some cannibalization in the high end/mid-range router segment by lower priced Layer 3 switches. We
estimate that Bay Networks and 3Com have about 38% and 26% of the emerging Layer 3 switch market, respectively, and believe they are well positioned to continue to benefit from high growth in this market.
Industry Consolidation
Do you view Nortel's acquisition of Bay Networks as a net positive or negative as a purchaser/user of data networking equipment?
Positive 66%
Negative 6
Neutral 28
Survey respondents approved of the Nortel/Bay Networks announcement, and are looking forward to integrated Nortel/Bay products, especially in the telephony arena. However, most respondents said they would prefer no more consolidation because they believe it would hurt competition. We expect to see more consolidation and
partnerships between data networking companies and traditional telecom equipment providers. We believe Ascend and 3Com are two companies who
would be attractive acquisition candidates for large telecom
equipment vendors.
Personal Investment
If you could only purchase one stock, which data networking company stock would you buy now, and why?
1. Cisco
2. Novell
3. Microsoft
4. Bay Networks/Nortel
Cisco was mentioned most often by a 3-to-1 margin over its closest competitor because of its market share and products. Novell was cited for having good products that were easy to use. Survey respondents liked Microsoft because it is an industry leader, and Nortel and Bay Networks because of the merger. |
