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: blankmind who wrote (26652)	12/6/1997 2:35:00 PM
From: Rajiv	Read Replies (2) \| Respond to of 61433

I shorted ASND at 30.625 yesterday. I feel that the takeover rumors will not turn into reality. My take on the rumors is that - Lu might have made an offer of $35/shr when asnd was in the low 30's and asnd refused (Maria B. sources probably forgot to tell her when the offer was made). Since then asnd has gone downhill and LU decided it is better off acquiring Livingston which competes with ASND (does not have a wide range of products as ASND) - Lu management is not foolish to offer 40-42/shr for a company which is trading in the low 20's. ASND's love affair with the big guys is long over - if LU were to offer such a price for ASND, I will be among the people rushing to short LU. Also, LU cannot make a stock offer for any large acquisitions till at least Oct 98. And it simply does not have the sort of $$$ that is required to buy ASND at 40. Next week if there are denials about the takeover or no fresh rumors, ASND will go down hill. There will be lot of people rushing for the exits and it can easily go to the low 20's (no one will care whether the management thinks that they are comfortable with 1998 estimates or not). On the other hand, if the rumors turn out to be true, ASND will move up to the mid 30's (I will be forced to cover my shorts in a hurry). I will then be shorting LU (or whoever makes a bid for ASND). Best of Luck (Longs and Shorts) Rajiv

To: blankmind who wrote (26652)	12/6/1997 2:36:00 PM
From: Chris Steele	Read Replies (1) \| Respond to of 61433

I can't remember the #....but something like 90% of wall street mergers are dilutive initially. Maybe someone knows a more acurate #. Chris

To: blankmind who wrote (26652)	12/6/1997 4:05:00 PM
From: gerard mangiardi	Read Replies (1) \| Respond to of 61433

People talk about dilution on an EPS basis, ie would an aquisition be immediately acretive or dilutive. I have seen very little analysis on this thread on the impact of an aquisition by either LU or Cpq on this subject. As I had posted previously I believe that Lu would be buying at least $2 a share in earnings in the first year after purchasing ASND. I think Asnd on its own will earn close to $1.50 and there would be another .50 in synergy\cost savings contribution. This would allow LU to pay about $60 in stock for the aquisition to be done in an non-dilutive manner, as I believe Lu is trading at at least 30x earnings. I also asked if anyone thinks Lu issuing deep in the money warrants as part of an aquisition price would be a way around what pooling of interests constraints may be in place for LU. I don't believe CPQ would get the other .50 in earnings power that LU would due to the fact that there is not enough synergy in the comapny's marketing or R&D.