Pat:
You were wrong about LU/ASND, but maybe right about buying NN for a follow on home-run. As I posted previously, I think NN is going to explode at some point soon based on buyout speculation although there are a lot of doubters. Another article to ponder:
Wednesday January 13 1:05 AM ET
Newbridge Shares Boosted By Takeover Speculation
By Sarah Edmonds
TORONTO (Reuters) - Speculation that one marriage in the computer networking world may beget another sent shares of Newbridge Networks Corp. (NYSE:NN - news) to their highest level in more than a year Tuesday.
Sources said the boards of Lucent Technologies Inc. (NYSE:LU - news), the world's largest telecommunications equipment maker, and Ascend Communications Inc. (Nasdaq:ASND - news), the fourth-biggest manufacturer of computer networking gear, were set to meet Tuesday to consider Lucent's possible acquisition of Ascend.
The deal would be worth at least $17.4 billion, and possibly more than $20 billion, sources close to both companies said. A deal would leave Newbridge and FORE Systems Inc. as the lone independents in the world of asynchronous transfer mode (ATM) technology, which allows the rapid movement of voice, video and data across networks.
''The only thing I could say is that the market is speculating that Lucent is going to acquire Ascend and you may see Newbridge and FORE stock both up because they're probably the only two remaining ATM companies,'' said Nikos Theodosopoulos, industry analyst at UBS Securities.
He declined to speculate on how eligible a marriage prospect Newbridge was.
Newbridge shares closed up C$2.85 in Toronto at C$52.60 after peaking at C$53.20 in earlier action. In New York, the stock climbed 1-1/2 to 34-3/4 after hitting a 52-week high of 35-03/16.
''It's a total load of hooey,'' said one Toronto-based analyst who declined to be named.
''Whenever these things happen there are only two ways to look at it. (There's) the realistic way -- which is, 'oh damn, their biggest potential buyer just bought their biggest, deadliest competitor.' Or there's the 'okay, well, they've been bought for eight times sales so that makes Newbridge more attractive so they're going to be bought', without stopping to think who the potential buyers might be, if any.''
The analyst said possible suitors named by the market include some major European players -- Finland's Nokia AB, Swedish player Telefon AB L.M. Ericsson, France's Alcatel Alsthom or Newbridge German-based joint venture partner Siemens
He said of these four, only Alcatel and Siemens were remotely likely. Siemens has been Newbridge's development partner since 1996 and the alliance accounts for about 15 percent of Newbridge revenues.
''Should Siemens buy them? Yes. Should Newbridge be acquired? Yes. Do they need to be acquired? Yes. Siemens currently has no incentive to buy Newbridge because they work together every day and they are co-dependent on one another,'' the analyst said.
''The only reason Siemens would do an acquisition tomorrow is if there was a hostile bid for Newbridge. The only person who could make a hostile bid would be like an Alcatel. It's possible, but hostile bids in tech are very rare because the assets that you're buying aren't bricks and mortar, they're people that go home every day.''
Another Canadian analyst was more convinced of the Newbridge buyout scenario.
''I give them six months; within six months, they will be bought by somebody, that's my prediction,'' he said.
The analyst said Ericsson and Nokia are far more likely candidates than Siemens because the Siemens and Newbridge cultures would not easily dovetail. |
