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

To: Peppe who wrote (5381)	4/17/1998 9:12:00 AM
From: Frank Ferrari	Read Replies (2) \| Respond to of 6980

09:00 ET ****** BAY NETWORKS INC. (BAY) 24 CLOSED. Shares of computer networking concern are expected to come under selling pressure this morning as Bay reported disappointing Q3 results. The company blamed weak industry demand and slow sales of its computer networking gear for the lackluster results. In Q3, Bay earned $0.04 a share, on a pro-forma basis, eight cents below the reduced First Call estimate, and 60% below year-ago pro-forma of $0.10 a share. Revenues in the period rose 6.7% to $547.18 million, but gross margins fell from 49% in the year-ago period to 47%. And the picture going forward is not expected to get any better either as the delays in orders and weak market conditions are expected to prevail in the coming months, causing the earnings picture to be more cloudy than in the past. Bay has made great strides in turning its situation around following the appointment of David House as its new CEO, especially during the past couple of quarters, which allowed the stock to climb above the $41 mark. However, the picture management painted last night is not pretty and suggests that management was caught off guard by the weaker trend in the market and longer customer purchase-decision cycles. Bay had previously warned about encountering a tougher market environment, but when you miss reduced expectations by such a wide margin there is a price to pay. The stock is expected to take it on the chin this morning as competition in the switch business intensifies and investors perceive that Bay is being left behind, despite the strong sales of its Accelar switches it enjoyed in the first part of the year. Already DLJ has downgraded the stock from "buy" to market perform" and other downgrades and earnings cuts will weigh negatively on the stock this morning. From briefing.com cheers Frank