To: jeff wheatley who wrote (26487 ) 12/5/1997 5:19:00 PM From: Gary Korn Respond to
(REUTERS) Ascend shares jump again on buyout speculation
Ascend shares jump again on buyout speculation
By Kourosh Karimkhany
SAN JOSE, Calif., Dec 5 (Reuters) - Ascend Communications
Inc. shares surged again for a second day Friday amid
speculation that the network equipment vendor is about to be
bought by Lucent Technologies Inc. or Northern Telecom Ltd.
Ascend also told investors that it remains on track to
report fourth-quarter earnings in line with what Wall Street is
expecting.
In the past year, Ascend has come up at least three times
as an acquisition target. The smaller networking vendors are
scrambling to merge with others to remain competitive against
industry giant Cisco Systems Inc.
An Ascend buyout "does make sense because of the
consolidation in the industry and the competition with Cisco,"
said Inder Tallur, analyst at Commonwealth Associates.
In the early afternoon, Ascend shares were up $3.125, or 12
percent, at $30 on Nasdaq trading of 23 million shares, the
most active in U.S. markets. On Thursday, the stock had jumped
another 14 percent.
Ascend, based in Alameda, Calif., specializes in networking
gear for online services and big corporate networks. Analysts
have said its products would fit nicely with telephone network
switches made by companies like Lucent and Northern Telecom.
For the past 10 years, computer networking gear vendors and
telephone switch makers have concentrated on their own niches.
But the two camps are beginning to barge into each other's
niches as communication networks carry an even mix of voice and
data.
Cisco, Ascend's biggest rival, is looking for product
development partnerships with companies that have telephone
network expertise.
Tallur said Ascend would like to go alone, but may not have
a choice as Cisco broadens into more niches.
"The question now is the price" at which Ascend executives
would agree to a buyout, he said.
Spokespeople for Lucent and Northern Telecom declined to
comment about the speculation. Michael Ashby, Ascend's chief
financial officer, also declined to comment in an interview
late Thursday, but said, "It's an old rumor."
Ascend also got a boost when Ascend executives told
investors they expect to meet Wall Street earnings forecasts
for the fourth quarter. The consensus estimate is 24 cents a
share, according to a recent analyst survey by Zacks Investment
Research.
"We are fairly satisfied with the business and the
outlook," Ashby said.
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