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

To: Glenn D. Rudolph who wrote (26767)	12/6/1997 11:19:00 PM
From: Tech97	Read Replies (1) \| Respond to of 61433

First time lurker on this thread. I'm currently long on ASND and believe the company is grossly undervalued based on its future growth prospects. Regardless of a buyout, ASND could easily return to the 40's in the next 6-9 months if it can execute on its strategy to successfully integrate Cascade Communications. What's your opinion on the possibility of a merger betweeen ASND and LU. Just because LU can not account for the merger as a pooling-of-interests until October 98 doesn't mean it has to be a cash deal. Per Accounting Principles Board No 16, a company must meet all twelve conditions specified in that statement for the merger to be accounted as a pooling. For example, a company that issues stock in a transaction but fails to meet the autonomous condition (e.g. not an independent entity for at least two years) must account for the merger as a purchase transaction.(ie. excess of purchase price over net assets is recorded as a goodwill) Most companies today prefer pooling treatment to avoid recording of goodwill on its balance sheet and subsequent dilution to earnings because of the amortization expense. In summary, LU can still exchange stock but will not get pooling-of-interests accounting treatment because it was not considered a separate legal entity until October 96 (date of spinoff from AT&T)