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To: 2MAR$ who wrote (254)	8/10/2000 6:37:28 PM
From: 2MAR$	Read Replies (1) \| Respond to of 762

Another big day for EMKR, PHCM/SWCM (on their merger) Software.com to Merge with Phone.com By Ilaina Jonas NEW YORK (Reuters) - Phone.com Inc. and Software.com Inc. on Wednesday said they would merge in an $8 billion stock deal to create the top provider of the technology that delivers Internet access over cellular phones, handheld computers and other wireless devices. The companies also lured away a top Cisco Systems Inc. (NasdaqNM:CSCO - news) executive to lead the merged company. Don Listwin, a 10-year veteran of the world's top maker of networking equipment, resigned from Cisco Tuesday evening and will become chief executive of the yet-to-be named firm. Listwin had been widely seen as heir-apparent to Cisco CEO John Chambers, Wall Street fell in love with the deal. Stocks of both companies surged on Nasdaq after the announcement, with Software.com (NasdaqNM:SWCM - news) jumping more than 32 percent and Phone.com (NasdaqNM:PHCM - news) climbing nearly 17 percent, as analysts lauded the formation of a giant player in a market seen booming for years to come. ``I think it was a terrific combination,'' Robertson Stephens analyst Marianne Wolk said. ``It creates a powerhouse in the wireless community. This is an enormous market that they're targeting together. At a very early stage, they've created a leading provider.'' Terms of the deal, which requires shareholder approval and should close by year end, call for each Software.com share to be traded for 1.6105 Phone.com shares. The merged firm will be based out of Phone.com's current headquarters in Redwood City, Calif. Though structured as a purchase of Santa Barbara, Calif.-based Software.com by Phone.com, ownership of the combined company will be divided evenly between both companies' stockholders. Cisco will inherit a small stake courtesy of the 6.4 percent of Software.com it owns now. With Phone.com shares gaining 13-1/16 to close at 91-1/8, the value of the deal ballooned from its original $6.8 billion to nearly $8 billion by day's end. Software.com shares rose 34-11/16 to 142-7/16, and Cisco moved up 2-5/16 to 67-13/16. New Goliath In A Booming Market Phone.com's so-called ``Wireless Access Protocol,'' or WAP, technology enables Web pages to be tailored and sent over the Internet to cell phones. Software.com provides ``unified messaging'' -- voice mail, e-mail and paging messages, faxes, over the Internet -- and Internet infrastructure to large telecommunications companies. Together Software.com and Phone.com sell to 150 large telecommunications providers, with only eight of those overlapping. Robertson Stephens estimates there will be about 2 billion wireless users globally by 2003 over 77 wireless telecommunications carriers. Goldman Sachs analyst Vik Mehta said the combined company is expected to be profitable by the third quarter of 2001, versus the projected fourth quarter for Phone.com alone. ``It's a great opportunity to build new Internet-based software infrastructure in this explosive market,'' Listwin said. ``I think it's about $100 billion market that's under transition. If we could just capture 5 or 10 percent of that, we'd be quite happy.'' WAP technology, while seen holding great promise, remains in its infancy. Popular in Asia, particularly Japan, and growing more so in Europe, it has yet to get a significant leg-up in the United States. ``Phone.com faces serious strategic challenges,'' said analyst Simon Buckingham with wireless research firm Mobile Lifestreams. ``The wireless application protocol standard upon which its initial success was based has been slow to take off and poorly accepted by end-users.'' WAP is ``just out of the womb, and just starting to grow,'' Frost Securities analyst George Chandler said. While WAP is often criticized, Frost said so far no one has come up with an ``open'' alternative. Only Japan's NTT DoCoMo's (9437.T) iMode, extremely popular in Japan, offers similar capabilities as WAP. But it is proprietary, not openly available to makers of applications for it. Deal Brewing For Six Months The idea of a merger of Phone.com and Software.com had been discussed with increasing intensity over the past six months. The companies had worked together on a handful of projects for such carriers as British Telecommunications Plc (BT.L), and Phone.com Chairman and CEO Alain Rossmann and Software.com CEO John McFarlane began kicking around the notion of a combination. After those talks reached the board level, Listwin, a member of the Software.com board, raised the idea of becoming CEO. ``I got involved in a dialogue with John McFarlane that said 'Wow, this combination may be very powerful potentially,''' Listwin said in an interview. ``'I'm interested. Would you and Alain be interested?''' ``He's going to be very instrumental in making the company a multibillion company,'' Robertson's Wolk said of Listwin. ``It's an absolute coup. You're seeing great credibility for the company.'' Rossmann, a one-time Apple Computer Inc. (NasdaqNM:AAPL - news) executive known by some as the ``father of WAP,'' will serve as chairman of the combined company. McFarlane will be executive vice president.