Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: username who wrote (1063)	1/29/1998 6:34:00 PM
From: Maverick	Respond to of 1629

Merger scenarios By Fred MCClimans In my last column, I made 10 predictions for the coming year. Two of the predictions generated a number of calls: that Cisco, Bay and Cabletron would buy all manner of gigabit start-ups by the fall, and that one of the Internetworking Big Four (Cisco, Bay, Cabletron and 3Com) will disappear as a separate company by year's end. Last week's announcement by Cabletron that it will buy the 75% of YAGO (Yet Another Gigabit Organization) Systems that it didn't already own shows the first prediction is coming true. The Big Four are moving into gigabit technology (from LAN switches to routers for the WAN), in large part by buying smaller start-ups with hot technology. Cabletron's acquisition was a smart move because YAGO's switch/router technology will let Cabletron penetrate certain corporate and ISP markets. It also helps create more of a cutting-edge aura for the company in the trade press and financial and user communities (for more information, see report 180114-0001-01.NV ''Cabletron Acquires Yet Another Gigabit Organization'' in the public reports section of www.currentanalysis.com). As a side note, the acquisition also confirms that the purpose of many of the gigabit start-ups was not to actually sell anything, but to gain the attention of the big players and then sell out.

To: username who wrote (1063)	1/29/1998 6:36:00 PM
From: Maverick	Respond to of 1629

Merger, Part II This won't be the last gigabit company Cabletron will snap up this year. Look for it to try to acquire additional technology to help it catch up with Cisco, Bay and 3Com in everything from remote access to VPNs and extranets. Unlike Cabletron, Bay doesn't really need to kick up a market fuss - it's doing just fine on its own. While Bay is not without problems, Dave House has done an admirable job of righting a listing ship (if not quite of Titanic proportions). Bay is more likely to acquire smaller companies, such as New Oak, to solve specific technology gaps in its overall product strategy. In the case of New Oak, Bay can now make a case in the new extranet market. Because it competes in a range of markets, from ISPs to cable TV to intranets, look for Bay to try to acquire companies that build products it could not develop on its own. Cisco, too, will dip into its acquisition fund. This is not so much to shore up its technology but because Cisco buys companies because it can - that 30% annual growth rate means a fair bit of change for purchases. Cisco is so large and has such a diverse client base it could easily swallow another two or three gigabit companies and not run into any significant channel conflicts. In fact, there were some pretty strong rumors that Cisco was looking hard at Yago. If I were Mr. Chambers, I'd be looking at every gigabit company right now. So what about the imminent demise of one of the Big Four? First, I do not feel that there is room in the present internetworking market for more than three powerhouse companies. Second, it is extremely unlikely (no, make that downright impossible) that any two of these firms (Cabletron, Cisco, Bay and 3Com) would merge. Third, the chances that one of these vendors migrates away from the traditional core market is increasing every day. Put another way, there is an increasing chance that the market will begin to splinter and one of these firms will find themselves playing in a fundamentally different market.