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Technology Stocks : Newbridge Networks -- Ignore unavailable to you. Want to Upgrade?

To: Serge Collins who wrote (13671)	10/15/1999 2:50:00 PM
From: gbh	Read Replies (1) \| Respond to of 18016

All this talk about share exchange formulas begs the question -- why did Newbridge management decide to make a relatively small takeover using a share exchange instead of buying the company outright with cash? Pooling of interest, write off in process R&D. Many advatanges when it comes time to reporting earnings that might need an extra penny or two. Just ask CSCO. Gary

To: Serge Collins who wrote (13671)	10/15/1999 4:18:00 PM
From: fumble	Respond to of 18016

All this talk about share exchange formulas begs the question -- why did Newbridge management decide to make a relatively small takeover using a share exchange instead of buying the company outright with cash? There are no regulatory hurdles preventing them from buying Stanford with a cash tender offer. I know some will say that this is the way it's done with most takeovers, but most takeovers in technology involve much bigger plays where the outlay of cash would make that prohibitive. In this case Newbridge had more than sufficient cash on hand to do it. It could have avoided much trouble, uncertainty and further dilution. What they chose instead was a somewhat complicated exchange formula, and a formula that lends itself well to manipulation. If they wanted to buy Stanford with a share exchange, they should have made it a clear and precise exchange with a clearly defined exchange price. You have to judge the merger finances from the point in time when the agreement was signed, not now. 20-20 hindsight is not a fair way to judge it. As far as stock vs cash, maybe the idea was to have the folks at STII 'on board' for the future with NN. Also, paying in (newly issued) stock makes NN a bigger company (in terms of market cap). Earnings/share are then computed on the earnings of STII + NN / (combined share total).