Hey guys, don't panic. The world does not ends here. Here it goes-
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DOW JONES NEWS SERVICE STORY 1 PAGE 1 OF 4
16:15 =3Com Stock -2-: Ascend Seen More Likely To Partner >COMS
Earlier this week, market players said, rumors were circulating of a
possible combination between Ascend and a wide-area player like Cascade Communications Corp. (CSCC) or Newbridge Networks Corp. (NN), both of which make products for frame relay and asynchronous transfer mode, or ATM, backbones.
Observers said such a combination may make even more sense after the
3Com-U.S. Robotics merger is taken into account.
Officials from Ascend and Cascade didn't immediately respond to telephone calls seeking comment. A spokesman for Newbridge Networks, of Kenata, Ontario, declined to comment, citing company policy.
Recently, Cascade, of Westford, Mass., was off 2 1/2, or 7.7%, at 30 1/8 on Nasdaq volume of 6.7 million shares, compared with average volume of 4.5 million.
Newbridge Networks was trading at 31 5/8, off 3/4, or 2.3%, on light volume of 370,100 shares.
The chief target of the 3Com-U.S. Robotics merger, and the force driving the substantial consolidation of the networking equipment industry, is its largest player, Cisco Systems Inc. (CSCO). Cisco's aggressive acquisition strategy during the past few years has allowed it to expand beyond its initial stronghold in Internet routers and offer a complete line of networking products.
Increasingly, corporations and Internet service providers are looking for one networking vendor for all of its products as their own systems grow. Cisco, of San Jose, Calif., has been best positioned to accommodate those desires.
Analysts said the U.S. Robotics acquisition, while making 3Com a challenger to Cisco in terms of overall size, doesn't represent a huge widening of the fronts where they are in direct competition.
Cowen & Co. analyst Chris Stix said only about 30% of Cisco's product line will overlap with 3Com post-merger. Cisco doesn't make adapter cards or modems, he noted, and isn't interested in those markets. He doesn't expect the deal to have a huge impact on Cisco.
Cisco was trading at 55 3/16 recently, down 2 3/8, or 4.1%, on Nasdaq volume of 11 million shares. Average volume is 9.3 million.
Another analyst, J.P. Morgan Securities' William Rabin, said he saw some positives and negatives for 3Com in the acquisition, but he came out ''neutral to negative'' overall.
Rabin said he wondered whether U.S. Robotics, which this week became the first modem maker to introduce next-generation x2 technology, would be distracted by the merger at a time when it should be pressing its advantage over competing products to be introduced soon using technology from rival Rockwell International Corp. (ROK).
U.S. Robotics Chairman and Chief Executive Casey Cowell, who will be vice chairman of the combined company, disagreed, telling Dow Jones that 3Com's strength in corporate markets would provide an entry for U.S. Robotics' products there.
''We think (x2 is) going to be a grand slam,'' with large Internet service providers and large dial-up networks, Cowell said.
On news of the merger, Xircom Inc.'s (XIRC) stock fell 2 5/8, or 11.1%, to 21 after Cowen's Stix downgraded the stock to neutral from buy. Stix said the U.S. Robotics purchase makes 3Com a more credible competitor to Xircom, a Thousand Oaks, Calif., maker of mobile PC card communications products.
(END) DOW JONES NEWS 02-27-97
4:15 PM |
