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

To: blankmind who wrote (2831)	1/15/1998 6:14:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 8358

Networking Stocks are Ready for Round Two The Motley Fool - January 15, 1998 13:25 COMS ASND BAY CS CSCO V%MFOOL P%TMF January 15, 1998/FOOLWIRE/ -- Although hardly outstanding performers over the last few weeks, the erstwhile stars of the momentum universe known as "networking" companies have begun to recover from December's Asia-inspired lows. An evenly weighted portfolio consisting of 3Com (Nasdaq: COMS), Ascend Communications (Nasdaq: ASND), Bay Networks (Nasdaq: BAY), Cabletron (NYSE: CS), and Cisco Systems (Nasdaq: CSCO) has risen 11% since last Friday. Although most of this gain is a recovery from panic selling late last week, the Investor's Business Daily "Computer - Local Networks Industry" Group has risen to 72 out of 197industries versus sitting at 96 last Friday and 187 six months ago, indicating that on a relative basis the shares are doing well. Brokerage upgrades, strategic acquisitions, and positive guidance issued to analysts are among the many factors explaining the surge. Possibly the most salient bit of news is 3Com's decision to inform analysts in a meeting late yesterday that its inventory woes would be over by February. Chief Executive Eric Benhamou informed the assembled "anointed" deigned to receive guidance from the second-largest data networking company on the planet that the industry as a whole only grew 15% in 1997, but that he saw 20% growth in 1998. The only published analyst report on the meeting came from Adams, Harkness & Hill, where the conclusion was that reduced channel inventory and Asian pressures would still severely constrain revenue growth prospects. Calling the consensus estimates still "too optimistic," the shares were rated "market perform." However, this first bit of positive news from the company in more than six months still pushed its shares up $1 to $33 11/16 this morning. On the acquisition front, both Bay Networks and Cabletron were out yesterday making some interesting purchases to bolster their technology portfolio. Bay will acquire New Oak Communications for its "virtual private network" (VPN) technology, while Cabletron is buying the 75% of Yago Systems it does not already own to get the company's "visionary" Gigabit Ethernet and switch router technology. Investors appraised the Bay purchase as a positive as it makes Bay the first networking equipment provider to focus on VPNs, but were more skeptical of the Cabletron's decision, indicating that the company would have been better off buying upstart Ipsilon Systems except for the fact that Nokia (NYSE: NOK/A) got to it first. Regardless, the fact that both companies are making acquisitions was deemed a positive for the group as it showed that management had overcome panic and was beginning to look forward again. While it may be premature to think the worst is over for the companies, these are the first really positive developments in weeks. - by Randy Befumo