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

To: H-nator who wrote (5392)	4/17/1998 11:07:00 AM
From: getgo234	Read Replies (1) \| Respond to of 6980

To everyone: If the relationship between BAY and LU is so strong why isn't BAY's top line growth being helped by LU's very strong growth ? Secondly, If LU approached BAY regarding a merger would House have a propensity to say " Thank you very much but I will do whatever it takes to make BAY a success without being acquired ". Thanks for any comments.

To: H-nator who wrote (5392)	4/17/1998 11:07:00 AM
From: Beachbumm	Read Replies (1) \| Respond to of 6980

All in all, I expected the carnage to be worse. Beachbumm

To: H-nator who wrote (5392)	4/17/1998 11:54:00 AM
From: Paul Fine	Read Replies (1) \| Respond to of 6980

Re shared media: Your point is a good one, and was addressed in the conf.call. The fact that about 26% of Bay's revs are "hubs", much more than competition, is because SNPX was the leader in this area(with CS second). Cisco, Asnd, Coms, started their companies on a different product base. As you correctly point out, as this segment declines, Bay has more to lose. Also, they must sell much more of the new products(eg. switches) to compensate for this loss. However, as House pointed out, this negative weighting factor gets smaller and smaller each quarter. Also(good news/bad news), Bay was weak in ALL segments of the business this quarter, not just hubs. In fact, one analyst made the remark that Remote Access is almost non-existent and shows no sign of growing. House did not give a clear response to that, as I remember. Should they still be pushing in this area if they are not making progress? Finally, in regards to someone else's earlier post about firing the CFO: This guy just reports the numbers, he doesn't drive sales. Easy to look for a scapegoat, but it should only be the CFO if he is cooking the books and lying to the CEO. I do not believe for one minute that is what Rhynne has done. He is alittle short on people skills, based on my personal contacts with him, but that is not a hanging offense(or I would have a long neck myself). Going forward, Bay needs to prove it can be a full network provider, not just a one-trick pony(350T last year, Accelar this year, something new next year, etc). With a company this big, a single new product cannot offset major declines in the rest of the line(per your original point). This repeats Bay's mistake of a few years ago, when all the focus was on ATM, and the market did not move to that area as fast as planned and Bay had a gap in offerings. The longer decision process for Accelar is bad enough; the new products coming out are even more unique and the learning curve will be even longer(per House). So when will we see sales growth, WITH earnings growth(350T HD grew units, but lost in rev $ due to price cuts)? Has to be in next 6 months. After that, Cisco will have their offerings out, and no matter what tech superiority House claims the Accelar line has, the Cisco name will offset that and pricing action will be the only way to hold share. That means lower earnings than forecasted. It is not a pretty scenario longterm, unless we see an upside surprise in the next two quarters. The acquisition rumors are sure to start again as we approach Oct, given the Lucent situation, but that does not assure rewards for us. No law says they would have to pay a premium for a company that is not performing. As I said before, the prudent money would have exited this stock two weeks ago and awaited the numbers before coming back in. If I had followed my own advice, I could have exited at $27 and bought back(if I wanted to?) at $22 and change. Instead, I am looking at a 17% drop and a possible margin call. This is not a stock to buy and hold longterm; it is and always has been a trading stock. That is not necessarily a bad thing, as long as you recognize it for what it is. Painting stripes on a horse does not make it a zebra. Enough for now. Paul

To: H-nator who wrote (5392)	4/17/1998 3:50:00 PM
From: rupert1	Read Replies (1) \| Respond to of 6980

H-nator: I agree with your opinion regarding shared media products and the CC: I thought House was squirming on this one and glad to get off the topic; the best he could offer was that BAY's heavy reliance on shared media products would lessen a few percentage points each quarter - in other words, it was a problem that would "grow" away. On the other side of the coin, House did seem determined to wean clients off shared media products onto new offerings from BAY rather than from competitors (as has been happening because of gaps in BAY's product line-up) thereby keeping the revenues in the BAY family, so to speak. I think BAY would also argue that some of the drop in revenues on the shared media sales was due to problems of diminishing margins, a percentage of which is temporary, and to price cuts, which will not be ongoing in the June and September quarter. In general, BAY has to hope it can at least maintain its share of a growing pie in all its product lines, until Accelar and other new products can begin to gain market share. Victor