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

To: Narotham Reddy who wrote (46063)	5/5/1998 1:33:00 PM
From: djane	Respond to of 61433

5/25/98 Fortune article on LU vs. CSCO battle. [Another LU/ASND acquisition reference] pathfinder.com pathfinder.com pathfinder.com pathfinder.com Excerpts: "In facing off against Cisco, McGinn knows that mutability is a prerequisite. For starters, he wants to expunge Bell Labs' not-invented-here bias. Says Schroder & Co. analyst Philip Sirlin: "They know they can't hope to develop everything internally." McGinn has already purchased several small companies that can beef up Lucent's data portfolio, including Yurie Systems, the company he just bought for $1 billion. (Yurie is a rising player in a switch technology called ATM, for asynchronous transfer mode, which is of great interest to phone companies because it can handle voice and video as easily as it moves data.) Bigger purchases may be in the offing: Up to now Lucent has been barred from using a low-tax merger method called pooling of interests because of some tax benefits associated with the spinoff, but that prohibition expires Sept. 30. One possible target is Ascend Communications, the $1.2- billion-a-year Alameda, Calif., company that is the industry leader in ATM." "These reinvented data networks eventually will carry voice and video communications too. Today the volume of data traffic on the world's communication networks is roughly equivalent to the volume of ordinary calls. But data traffic is growing wildly, somewhere between 200% and 600% a year, vs. just 10% a year for voice. Within five years or so, the volume of traffic on data networks will dwarf that of phone calls. Then it will make sense to start converting phone calls into digital bits and adding them to the traffic flow at very little cost, like fleas hitching a ride on an elephant." "The old world won't last forever, though. As they struggle to meet the demand for new lines, phone companies are frantic to shunt data traffic from their overstretched networks, which were designed to carry voice, not the ones and zeros of computer language. That means Lucent must be ready to move with them into the new realm of data networking. As Lucent talks to big customers about the network of the future, it is butting up against a new enemy everywhere it turns: Cisco Systems. Says Lucent networking chief William O'Shea: "We see them in almost every major bid."