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

To: Jay M. Harris who wrote (26727)	12/6/1997 6:51:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 61433

U.S. OPTIONS FOCUS/Investors jump on Ascend ride Reuters Story - December 05, 1997 17:30 %ELC %US %DRV %STX %INSI %.N/OPT ASND %TEL %ENT LU NTL.TO NT MCIC V%REUTER P%RTR CHICAGO, Dec 5 (Reuters) - Options investors jumped on the Ascend Communications Inc takeover bandwagon Friday, snapping up calls on speculation that the computer networking gear maker would be bought out, traders said. But they said all the action was on the retail side, indicating institutional investors were staying away. "There's all kinds of retail speculation out there," said one options trader in New York. "There's an absolute flood of retail orders. Nothing institutional." Some options participants believe institutional activity often lends credence to takeover speculation. Institutional funds are often viewed as "smart money." In late trade, shares of Ascend were up 2 at 28-7/8 after reaching 32-1/4. It was the most active stock on Nasdaq, with turnover topping 29 million shares. Late Thursday, the company declined to comment on the takeover speculation, but said it remained on track to report fourth-quarter earnings in line with Wall Street expectations. In an interview late Thursday, chief financial officer Michael Ashby called the buyout talk "an old rumor." Ascend has come up at least three times as an acquisition target in the last year. "This is one that retail people can grasp," an options trader in Chicago said of the Ascend takeover talk. "Retail guys love tech stock takeovers." Among the options, the December 30 call traded 11,530 contracts and the December 35 call traded 11,475, making them the two busiest Ascend options. Call action was heavy in the January series also, led by the 30 and 40 strikes, and remained steady through the March and June series, though at a slower pace. Put action was focused on the December 30, which traded about 4,775 contracts. The January 30 put traded 2,940. "There's no real institutional paper," the trader in Chicago said, adding that he speculated the initial rumor, which surfaced Thursday afternoon, was floated by an investor who had bought the stock as it fell from around 30 in late October to the low 20s. The activity pumped implied volatilities sharply higher. Implied volatility in the December 25, 30 and 35 options ranged from the upper 70s to the low 90s. Volatility in November averaged about 55. Over the last 60 trading days, volatility has averaged about 65. Lucent Technologies Inc and Northern Telecom Ltd were the rumored suitors of Ascend and both declined to comment on the speculation. In other action, options on MCI Communications Corp increased, mainly on the call side, as the stock popped to a new year's high at 45 before backing off. MCI gained 3/16 to 44-13/16 after reaching 45. Volume was modest at about 1.97 million shares. Among the options, The January 42-1/2 call traded more than 7,900 contracts, the April 50 call traded about 7,620 and the January 45 call traded 6,630.

To: Jay M. Harris who wrote (26727)	12/6/1997 7:59:00 PM
From: Gary Korn	Read Replies (3) \| Respond to of 61433

Jay, Thanks. Every time I read the Alan Lutz interview with VARBusiness, I become more convinced that CPQ has significant plans in networking. I'm not saying that the article proves CPQ will purchase ASND or even suggests such a thing. It is just that ASND seems such a fitting solution to a big part of what CPQ wants. That being the case, CPQ simply cannot be ignoring ASND. Look at these tidbits: "The practical reality is that there is no need to abdicate the networking space to 3Com. We think we can do very well in accumulating market share." ... "We're enormously excited about the remote acess market-both servers and concentrators. We see ourselves bringing NT-based platforms to that space. We see 56K flex access and eventually some form of ASDL. We see it as a very rapidly growing marketplace when measured by the number of ports that Compaq has had to add to support its own users." . . . "People think of Compaq as a PC company, and we're trying to change that. We would like to be a computer and communications company. I think we're making progress." . . . "Q: How much autonomy do you hae to pursue acquisitions? A: This activity is blessed right at the very top as a strategic direction that the president himself really wanted to do . . ." . . . "We wanted 25 percent of the RAS market. And that meant that we were going to put in place the plans and assets that would allow us to compete with the likes of Ascend, Cascade and USR/3Com. The goal was a dominant market position." . . . "Telecom is something I would like to do. . . . Tandem also brings us an entry in to the world of the RBOCs. They have been making CPE equipment for some time now." . . . "In 1998, we are trying to turn on the marquee and say, 'Compaq is in this space.' We're going to work actively to get to the point where people think of Compaq as a dominant player in this space. Compaq has a chance to be an enormous corporation without networking, but it is my goal to broaden the marketplace in which Compaq plays and make it an even stronger force." Gary Korn