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

To: Paul Lee who wrote (4830)	3/18/1998 9:39:00 AM
From: Jurgen	Read Replies (1) \| Respond to of 6980

Briefing.Com 09:00 ET ****** BAY NETWORKS INC. (BAY) 24 CLOSED. Computer networking stocks are expected to experience some selling pressure today after this networking concern warned that it sees a sequential decline in Q3 operating income and revenues due to weaker than anticipated demand. According to BAY, it sees a sequential decline in revenues by as much as 10% from its Q2 level of $645 million when it recorded a profit of $0.27 a share. And while BAY still expects to be profitable in Q3, earnings will certainly come in below current market expectations. In Q3, the company was projected to record a profit of $0.28 a share, compared with a net of $0.10 in the year-ago period when revenue totaled $513 million. The company said that because of product transitions in the marketplace, it has placed pressure on its ongoing operations, even though its new Accelar product line has been well received by its customers. Accordingly, because of the expected 10% decline in revenues, BAY expects gross margin in Q3 to be below the 51.5% achieved in Q2. According to CEO David House, he said that ""looking forward, based on our current information, we are optimistic that we will see an increase over the December quarter revenue level even though we expect market conditions to continue to be competitive." The assumption is also that revenues for its Accelar line will show a sequential increase and that the company will benefit from the introduction of new products as well. Short-term, however, the revenue and earnings warning will not sit well with investors, as Cowen & Co. has already downgraded the stock from "strong buy" to "buy", although DLJ is going against the trend and upgrading the stock from "market perform" to "buy" based on improving fundamentals over the longer-term.