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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Bindusagar Reddy who wrote (10440)	10/20/1999 10:46:00 PM
From: gbh	Respond to of 21876

--OT-- Any old ASND'ers wondering, "whatever happened to Mory?" Ascend founders get stood up for $500 million By Matthew A. DeBellis and Julie Landry Redherring.com October 21, 1999 What was expected to be a major coming-out party Thursday fell flat Wednesday night for the founders of Ascend Communications. Their new company, Zhone Technologies, was expected to announce Thursday that it snagged $500 million to fund the purchase of a publicly traded communications company and to develop telecom technologies. But the company backed off from an email sent Wednesday to Redherring.com that outlined the expected deal. A company spokesman said there will be no announcement Thursday. However, the company still plans to announce at a future date it is receiving the funding from heavy hitters Kohlberg Kravis Roberts, the Texas Pacific Group, and New Enterprise Associates, according to a source close to the company. In addition, an undisclosed amount is expected to come from individuals, including executives of Zhone. Founded in September, the Oakland-based Zhone is headed up by a troika of former top executives at Ascend (now owned by Lucent Technologies [NYSE: LU]): CEO Mory Ejabat, chief technology officer Jeannette Symons, and chief financial officer Bob Dahl, who held the same positions at Ascend. None of the executives was available for comment. When Redherring.com asked for comment from Ms. Symons, a harried receptionist said, "Get in line. There are five people in front of you." QUESTION MARKS As of Wednesday evening, the company source said that an anticipated buyout by Zhone fell through because the two parties could not come to terms. Zhone is keeping a low profile, describing on its Web site only that the company plans to somehow integrate "expertise in voice, video, and data communications to deliver the rest of the next generation network." With the current management's strong history, Zhone will have no problem assembling an exceptional management team and raising tons of money, says a securities analyst who asked not to be named. He surmises that Zhone will acquire a public company that will use fiber-optic technology to more cheaply and efficiently transport data. This technology will be increasingly important as more video and software hosting services become available over the Internet. MYSTERY DATE Sources close to the deal say they could not divulge the name of the public company that Zhone had planned to acquire, due to concerns that publication of the news could affect the acquired company's stock price. However, the company's Web site reveals that Zhone plans to expand beyond Oakland, listing job openings in Westlake Village, California, and in the Boston metropolitan area. A Silicon Valley venture capitalist who asked not to be named says the anticipated deal has him scratching his head. Theoretically, if Zhone is raising only $500 million, it's unlikely it would be able to acquire a significant communications company, he says. "If the company is interesting, it's a billion-dollar market cap in a minute," he says. For example, the market cap of router maker Juniper Networks (Nasdaq: JNPR) is $12.4 billion. However, with backers KKR and TPG, both leveraged buyout firms, it's possible that the expected deal could be largely financed by debt, the VC says.