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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 72.11

-0.3%

Nov 5 3:59 PM EST

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To: Out_of_the_Trap who wrote (20705)	1/13/1999 11:22:00 AM
From: Soumya De	Read Replies (5) of 77397

It seems to me that the LU/ASND merger is more of a defensive play to compete against CSCO than anything. There is a very good article in this week's Economist on why over half of all mergers fail. If one looks at all the mergers which have been taken for defensive reasons and involve integration of companies spread over wide geographic distances,I think one will find that many of them fail. Also remember that the crucial question is whether LU can retain many of the employees of ASND. If CSCO lures key ASND engineers from this merger, all that LU has got are bricks and mortars -- in the long run that won't matter much. Look at the integration problems faced by COMS/USRX and ASND/Cascade. It would seem that integrating high-tech firms is even harder. This gives a splendid opportunity for CSCO to gain market share while LU's challenge is to not loose focus. It seems to me that LU will have their hands full. Moreover, let us not be so naive as to think that the company with the best technology will win. If that were true, MSFT would not be a 350 billion dollar company. Even assuming that ASND will have the better technology, they will still have to execute. The devil my friends is in the details. Full disclosure: I own both CSCO and LU!! After all, as much as I believe my arguments, I still want to hedge my bets. This is huge industry and I can't see only one winner!!

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