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Technology Stocks : Ascend Communications (ASND)
ASND 199.63-1.4%Dec 18 3:59 PM EST
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To: The Phoenix who wrote (57294)11/18/1998 9:52:00 AM
From: Hagar  Read Replies (2) of 61433
 
Cisco could do it and maybe should, but I don't think they will.

1) First of all they tried to buy Cascade once and were shunned. Publicly they stated they prefered Stratacom. They are claiming successful product development and design wins in Asia. Going after that part of Ascend's business now could generate the perception that the Stratacom aquisition as unsuccesful (I won't say failure).

2) With the product overlap they would be forced to clean house with Ascend and existing entities. They haven't shown any experience in this. The repercussions throughout the company and the customers would be tremendous. They might refuse to do it on this basis alone.

3) The SEC/Justice department and competitors would certainly balk at it forcing Cisco to plan number (2) above in advance and to legally defend its plan. This would certainly de-focus the company.

4) Cisco has made a history of mostly aquiring smaller companies. This has allowed them to master the Wall Street earnings game. By making many smaller aquisitions, they can "play" around with charges against earnings, and if/when they aquisition yields fruit the earnings are unencumbered by the charges. This I believe allows them smooth out the earnings and makes forecasting earnings easier, you could say clouds up the earnings picture. Certainly Wall Street has loved this.

5) Its not entirely clear that aquiring Ascend guarantees Cisco as a major player in the future SP space. It is heavily dependent on what organizations in fact build out this new public network, Carriers or CLECs. Lucent, whether or not it aquires Ascend is guaranteed to be in the game. I believe Cisco has nearly the same chance with or without Ascend.

6) As a defensive maneuver it is way, way too expensive. With their attention to earnings and the investment community, I don't think they could justify it.

I could go on but I will leave that to others. I don't think Cisco would want to undertake it.
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