Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: swrdfsh who wrote (26545)	12/5/1997 8:56:00 PM
From: Charles D Dodai	Respond to of 61433

Ascend jumps on acquisition rumors By Binti T. Harvey, CBS MarketWatch Fri Dec 05 16:40:25 1997 ALAMEDA, Calif. (CBS.MW) -- Shares of the beleaguered Ascend Communications Inc. received a much-needed boost Friday on rumors Lucent Technologies Inc. is seeking to acquire the company. However, dubious analysts downplayed the speculation, asking, "What's in it for Lucent?" Late in Thursday's session, reports surfaced that Lucent had made a $35 a share bid for Ascend. Reportedly, Ascend refused the offer, hoping to draw a bid of at least $40. Also boosted by a bullish company presentation at a Deutsche Morgan Grenfell conference on Thursday, the stock has climbed almost 30 percent in the past two days, and closed up 2 1/8 at 29 Friday. Ascend shares definitely need resuscitation. As a technological leader in the networking equipment market, Ascend was considered a solid investment until its acquisition of Cascade Communications earlier this year. Increased competition and product delays caused the company to miss both second- and third-quarter earnings estimates, and many analysts believe the company gave poor guidance about its performance. Ascend shares have plunged about 60 percent from $80 a share in February to the mid-20s in recent weeks. "The company has lost credibility," said Aydin Tuncer, an analyst for Standard & Poor's Equity Group. "Until they give a clear road map of how they're going to compete with Cisco, I don't think the stock will get out of the mid-20s." The combination of Ascend's flailing stock price, loss of market share to Cisco Systems Inc.. and 3Com Corp., and increased industry consolidation has led many market observers to conclude the company is ripe for takeover. In fact, similar rumors circulated in October when the price fell to 30. "At its current price, it's certainly attractive," said Inder Tallur of Commonwealth Associates. However, Lucent may not be the right suitor. Lucent Technologies recently acquired Livingston Enterprises Inc., a smaller maker of remote-access products. Tuncer believes Lucent sought to acquire a minor player's technology, so it could develop its own remote-access product. Tuncer reasons that a company attempting to buy Ascend would be seeking an established product and market share -- an entirely different strategy from Lucent's. Donaldson Lufkin & Jenrette Pershing Division analyst Michael Geran agrees. "This rumor makes no sense. Lucent just acquired a competitor of Ascend, plus the company's just coming back from a disastrous merger." Canadian-based Northern Telecom Ltd. has also been named as a possible buyer, but analysts say that possibility is just as dim. Tuncer noted that Nortel has a well-publicized standing agreement with Shiva Corp. to jointly develop and market remote access products. To be sure, Ascend may be seeking a buyer to rescue it from a difficult situation. Analysts are speculating that disgruntled shareholders may be putting pressure on company management to seek acquisition. However, such a decision would mean Ascend has given up on its attempts to broaden its product offerings and market participation through the Cascade acquisition."The company may be planning to consolidate to compete with Cisco," Tallur said. "But remember, everyone has a price."