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To: P.M.Freedman who wrote (1009)	1/22/1998 2:11:00 PM
From: Maverick	Respond to of 1629

PSINet gets $400 million offer By Suzanne Galante January 21, 1998, 5:55 p.m. PT PSINet (PSIX) has become the heart's desire of U.S. Internetworking, which today made an unsolicited $400 million bid for the Internet service provider. As news spread of U.S. Internetworking's $10-a-share offer, faxed to PSINet this afternoon, PSINet's stock soared 30 percent, to end at 8-7/16 today, up from yesterday's close of 6-1/2. Over 2 million shares traded hands, about 4-1/2 times average daily trading. Some analysts say that the latest news increases the potential for more PSINet suitors to emerge. Christopher McCleary, chairman and chief executive officer of holding company U.S. Internetworking, said, "We asked to delay the special shareholder meeting on Friday to enable us to present directly to the shareholders a tender offer to purchase a minimum of 51 percent and maximum of 100 percent of outstanding shares of PSINet at a premium of what it is trading today." McCleary was president and CEO of Digex, another national commercial ISP, until very recently. Digex was acquired by Tampa-based Intermedia Communications in July, and McCleary's departure was part of Intermedia's reorganization. U.S. Internetworking, a holdings company, has a special meeting scheduled for this Friday to approve PSINet's pending transaction with digital network supplier IXC Internet Services. PSINet plans to give 20 percent of its equity to IXC Communications, parent of IXC Internet, in exchange for additional bandwidth. PSINet wants to acquire the right to access IXC's backbone, with its 10,000 OC-48 of fiber bandwidth that transmits data at 2.4 gbps. The transaction previously was announced in July, and is expected to close--following shareholder approval--in early March. [A prime candidate for ASND's GX550 OC-48 ATM core switch]

To: P.M.Freedman who wrote (1009)	1/22/1998 2:12:00 PM
From: Maverick	Respond to of 1629

PSINet spokeswoman Tonya Corum said the company's shareholder meeting still will be held as scheduled, and added that, at this time, it is not known if the U.S. Internetworking offer will be addressed. She added that PSINet will consider all offers that it receives. But David Takata, an analyst at Gruntal & Company, said PSINet does not have much time to make a decision. The ISP has been shopped around by Merrill Lynch for over a year, and many potential buyers already have reviewed PSINet's financial books, Takata said. Takata said he has a price target of $15 a share for PSINet, making today's offer weak compared to the company's potential. "A deal [with U.S. Internetworking or another suitor] is inevitable in the next couple of days, unless IXC sweetens its deal," said Takata, adding that it is unlikely IXC will up its bid. He explained that IXC does not need to increase its offer because PSINet will still need a backbone. Consequently, even if U.S. Internetworking buys the company, the former PSINet likely would still need to do business with IXC, if not with some other backbone provider. Should the IXC-PSINet deal go through, however, any long-distance telcos that had been interested in the ISP likely no longer would be, because such companies already have a backbone, Takata said. "[U.S. Internetworking's offer] validates the strategic importance of companies like PSINet, Digex, and AGIS (Apex Global Information Systems). PSINet is one of the last big tier-one backbone Internet providers," he added, noting that the company is in a unique position to move a lot of traffic, and as a result is a logical choice for big companies coming online. "This makes their strategic value go up," Takata said.

To: P.M.Freedman who wrote (1009)	1/22/1998 2:23:00 PM
From: Maverick	Respond to of 1629

Kiewit plans to build next gen. Fiber optic backbone network using IP Internet technology BY SETH SCHIESEL New York Times Joining a growing list of companies that are building new national communications networks, Peter Kiewit Sons Inc. has said that it intends to spend up to $3 billion over the next three years to build a 20,000-mile web of fiber optic cable. The system, which the company wants to complete by 2001, would be the first national fiber optic network based on Internet technology rather than on standard telephone technology. If the Internet technology works as predicted, it could allow Kiewit to charge prices for voice and data communications much lower than those of its competitors, while maintaining healthy profit margins. Kiewit plans to sell access to its network only to business customers. Most of those would be small and medium-sized companies, but some could be upstart long-distance carriers that would resell time on the Kiewit network to consumers. Monday the Kiewit subsidiary that intends to build the network, Kiewit Diversified Group Inc., announced that it had changed its name to Level 3 Communications Inc. Level 3 is led by a team of executives who used to run the MFS Communications Co., the alternate local telephone carrier that was acquired in 1996 by Worldcom Inc. for $14 billion. The move by Kiewit, a private company based in Omaha, Neb., that has its primary operations in construction and mining, brings to four the number of companies building new national communications networks. Kiewit joins IXC Communications, Williams Cos. and Qwest Communications subsidiary of Anschutz Corp. Established long-distance carriers like AT&T also spend billions each year upgrading their systems. [A prime candidate for ASND's GRF IP switch router. Williams & ATT & QWest are big customers of ASND's CBX 500 & GX550 for ATM edge/core multiservice ATM switches.]

To: P.M.Freedman who wrote (1009)	1/22/1998 2:24:00 PM
From: Maverick	Read Replies (1) \| Respond to of 1629

But Level 3's network would differ from the others in its reliance on Internet Protocol, or IP, technology. IP can allow networks to be used more efficiently but can also be less reliable than traditional networks. Traditional networks generally allow voice and data messages to be transmitted in one continuous chunk. IP networks break messages into small packets that are each sent independently to their destination. ''IP is ready for prime time,'' said James Q. Crowe, Level 3's chief executive, who was MFS's chairman. He said, however: ''With today's technology, IP is fine for anything that's not timing-sensitive, like data or fax. Anything that's timing-sensitive, primarily voice and video, isn't handled very well.'' But Crowe said that advances in the technology over the next few years would allow Level 3 to offer voice quality equal to that of more traditional systems. Crowe said that Level 3 had about $2 billion in cash but that it was confident it could raise the remainder necessary to complete its network.