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Technology Stocks : BAY Ntwks (under House) -- Ignore unavailable to you. Want to Upgrade?

To: rupert1 who wrote (3680)	1/21/1998 3:59:00 PM
From: Jurgen	Read Replies (1) \| Respond to of 6980

Here it is: BAY NETWORKS INC. (BAY) 26 7/8 -2 9/16. Despite posting sequential earnings and revenue growth in the fiscal 2Q, and results beating Wall Street expectation, shares of computer networking concern trade lower as Wall Street takes a more cautious view of the latest results. Bay Network posted a 2Q net of $0.27 a share, a penny above the First Call estimate, reversing a year-ago loss of $0.90 a share. Revenues increased by 25.3% to $644.91 million from a year-ago, and a sequential increase of 7.3%. Yet, Wall Street is less than pleased with the latest results, downgrading the stock for the most part, even though BAY expects its strong sequential growth to continue over the next two quarters. Gross profit margins also improved in the latest period, rising to 51.5% from year-ago level of 44.6%, as the company benefitted from the introduction of new products that were well targeted for its customers. In addition, Asia did not present a problem for BAY, with results from this region coming in on target despite the ongoing problems, while Europe posted a strong quarter. Nonetheless, the latest earnings report is being viewed more skeptically by Wall Street with Deutsche Morgan Grenfell downgrading the issue from "buy" to "accumulate", Prudential Securities marking down the stock from "buy" to "hold," and Goldman Sachs lowering its view from "buy" to "market perform." On the more optimistic side, Bear Stearns upgraded the stock from "neutral" to "attractive," while Lazard Freres & Co. raised its rating from "accumulate" to "buy." These latter upgrades, however, have had little impact on the stock as the negative market tone was set early following the disappointing results posted by IBM. Yet, despite today's downward turn in the stock and overriding negative sentiment held by the Street, it seems that the company is poised for further earnings and revenue growth as BAY seems to be making progress in providing products that are sought by its customers. While the company still faces significant competitive pressures from its two large rivals, Cisco Systems (CSCO 59 3/16 -5/16) and 3Com (COMS 31 11/16 -11/16), the stock continues to trade at a considerable earnings discount versus CSCO and COMS.