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Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: M. Charles Swope who wrote (3547)	7/16/2001 1:50:33 PM
From: Steve Fancy	Respond to of 3891

I like that thought:~) I am down to only 250 shares, but have been slowly accumulating 2003 25 and 40 leaps. A takeout, even at $35-$40 would leave me pretty darn happy:~) Thanks for the heads up! Steve

To: M. Charles Swope who wrote (3547)	7/16/2001 2:00:45 PM
From: Steve Fancy	Read Replies (2) \| Respond to of 3891

Alcatel Could Be Takeover Target, But No Buyer In Sight By VALERIE VENCK July 16, 2001 Of DOW JONES NEWSWIRES PARIS -- From predator to prey - it's a fine line in the global telecommunications equipment sector foodchain. Two months after it made headlines for its attempted - and ultimately failed - takeover of U.S. group Lucent Technologies Inc. (LU), French supplier Alcatel SA (ALA) looks increasingly vulnerable as a potential takeover target. After a 50% fall in its share price over the past two months, Alcatel's position has significantly weakened but it might be saved by the fact that its peers - and hence potential buyers - aren't much better off. "Who's willing to do deals now? There are more deals when the market is high and people feel good," said Sanjay Jhaveri, a fund manager at Zurich-based Vontobel Asset Management. "I suppose someone, somewhere at some point will make an opportunistic jump," said Susan Anthony, telecoms equipment analyst at Credit Lyonnais Securities Europe, although she doesn't reckon this will happen before the industry recovers "sharply and sustainably," which could take at least a year. Forrester Research's analyst Carsten Schmidt said it was difficult to predict when the market will begin to recover, but "within a year and a half, (third generation mobile phone) infrastructure contracts will take place," generating a rise in revenue for telecoms equipment suppliers. The problem is that it is currently very difficult to justify buying any company at a premium, said Vontobel's Jhaveri. U.K. peer Marconi PLC (MONI) which saw its share price slashed following a profit warning debacle earlier this month, doesn't emerge as a particularly attractive target, despite its low valuation. The stock fell more than 50% in one day when it warned that revenues in the 2001-2002 financial year will be 15% lower than last year and operating profit down by 50%. This makes Alcatel, the other big European participant in fixed telecommunications equipment a more attractive target. "Alcatel is now trading near its intrinsic value...it may be time to buy it. The company is far from bankruptcy and still solid," said a trader at a French broking house. U.S. group Cisco Systems (CSCO) emerges as an "obvious contender" for the French group, said Credit Lyonnais' Anthony. Acquiring either Marconi or Alcatel would give Cisco a significantly increased European foothold, but "if I were Cisco, I'd rather buy Alcatel than Marconi," she said. Canadian rival Nortel Networks (NT) may be another potential candidate, although the benefits of a merger with Alcatel wouldn't be as obvious as for Cisco. But Cisco and Nortel have also suffered from the general technology selloff and their share prices have been hit almost as much as that of their European peers. Cisco's shares have fallen 53% since the beginning of the year, while Nortel has declined 75%. Marconi's and Alcatel's shares have lost respectively 85% and 68% over the same period. Analysts and fund managers don't give much credence to recent rumors of a merger between Alcatel and Marconi. Sources familiar with the situation said last week that a merger between the two groups wouldn't make much sense. There would be too much product overlap, and a merger wouldn't give either of them the U.S. foothold they both need, said Credit Lyonnais' Anthony. Monday, Alcatel shares closed up EUR0.25 or 1.3% at EUR19.25. -By Valerie Venck, Dow Jones Newswires; 331-4017-1740; valerie.venck@dowjones.com