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Technology Stocks : Cabletron Systems (CS: NYSE) -- Ignore unavailable to you. Want to Upgrade?

To: Doug who wrote (2664)	12/16/1997 10:55:00 PM
From: Miles Rhyne Hoffman, CFA	Read Replies (1) \| Respond to of 8358

Takeover valuation techniques vary, especially in technology. Cisco has paid millions to obtain new technology from a company with no revenues, hence negative income, limited cash/sh, etc. Cabletron paid 1 times sales for a line of business (DEC) that had been for sale for a year - no takers - and from all accounts the DEC business has been on the decline and losing money... so how did Cabletron value DEC's net business? Only Cabletron knows. Is Cabletron a possible takeover? Yes, any company is, but is it likely? I don't know. Also, if you read the Dec 15th Motley Fool about Cabletron, you may have noted that it said (paraphrasing) "analysts are concerned it is not spending enough on R&D...". I e-mailed the author with my observations than R&D as a percentage of sales has been increasing but presumably to no avail. He acknowledged my clarification but noted that many tech companies spend R&D on "one-off" projects and not as an ongoing percentage of sales. This was news to me... food for thought.