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

To: Paul Fine who wrote (5684)	5/7/1998 7:32:00 AM
From: rupert1	Read Replies (1) \| Respond to of 6980

Paul: I have forgotten the formula but was always led to believe by my old ML broker that the actual volume of separate transactions was about 60% of the reported volume. Has anyone checked for the last two weeks (a) short interest (b) changes in percentage of institutional holdings. I, too, am intrigued by the volume. No doubt, a percentage is caused by the day-traders or short-term traders getting in and out within the narrow trading range. Some of the volume in the last ten days - both ways - was probably due to speculation on the rumours of a takeover and subsequent disappointments. I remember two years ago it used to go up and down from 24-29 on takeover rumours that never materialised. A percentage must be from institutions getting out - there has been serious block selling. But judging by block trades a slightly larger number are on the buy side. This is not the sort of one-way volume we had when the stock was crashing from $34 recently. In retrospect, those sellers were good guesses or were acting on good information. This volume seems to be confused or directionless with a very slight upward bias. House's recent purchases are not necessarily a good guide. When he bought his original 100,000 for 21+ the stock tanked for a good while to the 15-19 range! The CISCO results demonstrate an expanding pie for networking equipment and services. This ought to be good news for all networkers. Unfortunately, it also shows that CISCO is taking market share from Bay. It also demonstrates that BAY's excuses for a poor quarter are special pleading. It emphasises that marketing is where it is at - Cisco excells and Bay struggles both with its emphasis on leading edge technology rather than hot products actually in demand and the structural market disadvantages it has relative to CISCO. I had previously forecast that BAY would move to the 25-28 range in May, if not sooner. But I was respectful of the possibility that it could go to the 20-22 range earlier. Beyond that I could see argument for a range of 19-34. There is no new information on which to base an investment decision except the CISCO results. On balance I think they are more positive than negative for BAY. But they are not positive enough to start a new vogue in networking stocks, in general. Indeed, the CISCO results come with a lot of caution for the future. The BAY price could break the 22.50 or 25.50 range, you mentioned, on news. Unfortunately, that news could be bad, such as another warning, a disconnection from Lucent, a broker or writer stating that Acceler is not doing well and shared media sales doing a lot worse. There are analysts who think BAY should be lower in price than it is and still analysts who have not changed their BUY and STRONG BUY recommendations. They may be waiting for an opportunity to do so. On the other hand, the dearth of BAY news, the generally positive market news from CISCO, the seasonally strong quarter and ACCELER sales might provide some news which would cause an analyst or two to upgrade and give the share price a pop. But it is all very iffy, isn't it?