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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: kfdkfd who wrote (74870)	11/24/1999 5:34:00 AM
From: Ronaldo	Read Replies (1) \| Respond to of 90042

NN, a set of 3 posts from Yahoo by fi99_2000 1 of 3 After reading numerous posts it became apparent what is missing is a financial/analytical approach to arrive at what NN is truly worth to an acquiring company. The acquiring company is not buying NN for its brilliant sales force or their terrific marketing capabilities. What they are buying is the following: * 36170 - the industry leadng multiservice switch. Installed at 350 service providers worldwide. The Yankee group predicts a 36% compound growth rate with a market size of $7 billion in annual sales by 2003 for this type of switch. * 350 IVSN - the industry first multiservices ATM based access mode that supports voice and data services and also future IP-based services through a mix of narrowband and broadband access solutions. LMDS - NN early pioneer and currently winning 50% of all contracts. The Only company with fast TDMA capabilities. 3dSL - delivers integrated voice, broadcast video and internet access services to customers over existing copper infrastructures.This ground breaking technology costs only $20 more per port than the simple ADSL product from ALCATEL. * ATM based class 4 replacement switches running with SS7 software. * carrier class IP edge routers from the NORTH CHURCH acquisition. * IPsec security products from the TIME STEP acquisition. * the best network managemnt capabilities in the market place. Used exclusively by ATT to n manage their global GSMP network which manages networks for some of the biggest companies in the world. ---- 2 of 3 * soon to have a 50 gig switch and a 450 gig switch by mid 2000. Consider that Fore went for $5 billion without anywhere near the product offering of NN and only had a 40 gig switch. Therefore, you have to start at $5 billion and adjust for all of the state-of-art products outlined and the significantly larger installed base of teleco customers around the world. A premium of 40% is both reasonable and conservative. The price becomes $7 billion. Now what about the TDM revenue? About $500 million annual revenue of high margin business. The TDM business could be kept or sold for $1.5 billion much like the Stanford deal was structured. This raises the buyout price $8.5 billion. At this point you have to consider the affiliates. When IRONBRIDGE goes public through an IPO and if it is half as successful as Juniper was the 40% stake NN has can generate $2 billion. The total now is $10.5 billion. However NN also has about a dozen more state of the art affiliates like Imagic, Pixstream, Fast Lane, Space bridge, Starvision, Telexis, Bridgewater, Ubiquity, etc. No one can dispute the fact NN has realized significant gains in the past from the sale of affiliates such as BNI, ACC, Cambrian, and Vienna. It would be reasonable to assign another $1 billion for the rest of the affiliates. ------- 3 of 3 The total fair buyout price is $11.5 billion. Divided by 184 million shares is about $62.50 per share. Since there is more than one interested buyer a 10% premium should be added and the per share price becomes $68.75. NN has about $300 million in cash or about a $1.60 per share which should also be added raising the price to $70.35 per share for the buyout. Before the critics on this board start laughing consider the following: * 5% of NN's shares were probably purchased already at the $17 range (9.2 million shares)at a total cost of about $156 million. The rest of the shares will cost about $12.3 billion, total cost $12.456 billion. However, if the acquiring company sells parts of NN in the same way as the Stanford acquisition the net cost is reduced as follows: cash used to acquire Newbridge $12.456 billion less Newbridge's cash - .300 less sale of TDM business -1.500 less cash from Ironbridge IPO -2.000 less cash sale of affiliates -1.000 ------- Net Purchase Price $7.656 billion ------- Divided by 184 million shares the net is $41.60 per share. There isn't a U.S. networking company that comes close to the success NN has enjoyed in Europe and Asia so there wouldn't be an overlap in markets. It seems to me considering the products and successful market regions it would be a match made in heaven for some U.S. networking company. The motto remains hang tight and don't give up your shares for peanuts.