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To: Zoltan! who wrote (10567)	11/25/1997 10:49:00 PM
From: Helios	Read Replies (1) \| Respond to of 77400

DEC getting out of networks - another one bites the dust. <http://biz.yahoo.com/finance/971125/computers_digital_1s_2.html> Cabletron buys DEC network unit for $430 million (Adds analysts comment, details, previous MAYNARD, Mass.) By Leslie Gevirtz BOSTON, Nov 25 (Reuters) - Digital Equipment Corp., in a widely expected move, said Tuesday it was selling its troubled computer-network hardware business to Cabletron Systems Inc. for $430 million in cash, stock and product credits. The deal, expected to receive government approval in 60 days, means Maynard, Mass.-based Digital will get $90 million in cash, $50 million in Cabletron stock, and $290 million in product credit over the next three years. In return, Cabletron will acquire 250 patents, 900 workers, half of whom are engineers, and a commitment from Digital to generate $1 billion in revenues over the next 3-1/2 years for the Rochester, N.H.-based company. Cabletron said the acquistion -- the first since ex-NYNEX executive Don Reed joined the computer network product maker in September as chief executive officer -- will mean a hike in international revenues of 35 percent to 40 percent. Analysts were split on what the deal actually does for either company's bottom line. J.P. Morgan's William Rabin downgraded Cabletron to market perform from buy saying the acquistiion of Digital's networking business could hinder short-term growth. ''We belive that DEC's (networking) business is a deteriorating one and that it lessens the possibility for upside surprises over the next four quarters. Management's ability to improve the company's short-term growth rates were our primary reasons for having a buy recommendation on shares of Cabletron and we now believe that the DEC acquisition may hinder short-term plans,'' Rabin said. Salomon Brothers analyst John Jones Jr. found the deal ''an irritant. These kinds of deals are irritants. It's not a bad deal, but it has very little meaning for an analyst's strategy. It will not have a big impact on DEC.'' Jones said Digital, which recently settled a series of lawsuits with Intel Corp., has ''over $3 billion cash.'' ''I think that's why they went along with the earn out part of the deal,'' he said, referring to the $290 million part of the sale. Standard & Poor's analyst Megan Hackett, who follows both companys for the rating agency, said, ''This deal has been talked about for some time and alot of us have been waiting for it for quite awhile. The $430 million represents one-times revenues. ''It's pretty much a good strategy for both companies. Digital gets out of a business it was never strong in and Cabletron gets its products out,'' she said. During a conference call with reporters, DEC Chief Executive Officer Robert Palmer said his company is now weighing modest acquisitions. There are a ''wide variety of things that might be added. We do business in 100 countries around the world, so (DEC may consider) additional service capacity,'' Palmer said, adding DEC also may eye companies providing ''Internet-based business solutions particularly in the software area.''