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To: joe who wrote (15303)	4/27/1998 7:25:00 PM
From: Mang Cheng	Read Replies (1) \| Respond to of 45548

" Lucent to pay $1 billion for Yurie " By Binti T. Harvey, CBS MarketWatch Mon Apr 27 15:59:09 1998 MURRAY HILL, N.J. (CBS.MW) -- Lucent Technologies Inc. agreed to acquire Yurie Systems Inc. in a $1 billion cash transaction Monday, in a move that firmly establishes Lucent in the data-networking market while posing a threat to smaller, more focused network-equipment makers. Lucent (LU) said it will pay $35 a share for Yurie (YURI), a maker of asynchronous transfer mode communications technology and equipment for data, voice and video networking. Lucent expects to take a one-time charge in the third quarter for in-process research and development, and expects the purchase to be dilutive to earnings for the first full year of operation. "It's a good buy, but the price is a little too hefty in my opinion," said Richard Woo, networking analyst for Thomson Kernaghan & Co. "But Lucent has deep pockets so its probably not going to hit them too hard." Lucent will begin the cash tender offer no later than Thursday and expects to close the deal by the end of the quarter ending June 30. The boards of both companies have already approved the transaction. Lucent shares fell 2 13/16 to 70 9/16 while Yurie popped 3 1/16 to 34 9/16. "Today we fill in another key space in our data networking portfolio with this important acquisition," said Bill O'Shea, president of Lucent's Data Networking Systems group. The acquisition is a part of Lucent's strategy, announced last year, to enter the data networking business. Lucent has already acquired two data networking equipment companies, Livingston Enterprises Inc., and Prominet Corp. Woo said the acquisition benefits both companies. Yurie will fill in Lucent's "product gap," providing the last component of its end-to-end networking solution strategy and making it more competitive. "Lucent offers the core network, the access portion and now has the edge network technology," Woo said. The buy will also secure Yurie's future, as the company only offers one product -- a liability in today's network equipment industry. In the rush to provide end-to-end networking solutions, Woo sees smaller companies losing out. Lucent's latest purchase of Yurie will likely take another chunk of the already dwindling market share of companies like Fore Systems (FORE) and Newbridge Networks (NN). Ascend Communications (ASND), which is even more firmly positioned, will have to look over its shoulder as Lucent steps into the wide-area-network arena. "Smaller networking companies will either have to expand their product portfolio or offer a best-of-the breed product to compete," Woo said. Woo called the acquisition significant for Lucent as well as the industry, another sign of consolidation by the bigger players and marginalization of smaller companies. Woo sees the line between telecommunications and data networking equipment blurring as Lucent, Cisco (CSCO) and Nortel (NTEL) expand their markets. A recent alliance between Cisco and Ciena Corp. (CIEN) to combine switching and routing technologies with optical network development provides an example of the widening scope of the network industry. "Everybody is in each other's backyards," Woo said. "they're using their resources to step into other markets which are growing faster than their core products." cbs.marketwatch.com Mang