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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (2629)	5/13/1998 9:04:00 AM
From: William Hunt	Read Replies (2) \| Respond to of 21876

GREGORY--- Bay Networks Tells Analysts It Rejected a Bid From BCE's Nortel Bloomberg News May 12, 1998, 5:45 p.m. PT Bay Networks Tells Analysts It Rejected a Bid From BCE's Nortel Santa Clara, California, May 12 (Bloomberg) -- Bay Networks Inc. told analysts it rejected an acquisition offer from Northern Telecom Ltd. as too low but would consider higher bids from NorTel or other suitors. ''It's no longer a question of whether they (Bay) are for sale, it's now a disagreement over price,'' said Kevin Fong, a partner with the venture capital firm Mayfield Fund. Fong said he spoke to Bay executives about the offer. Chief Executive David House told Wall Street analysts at a meeting last week that the computer-networking equipment company would let shareholders decide whether to sell, said two analysts who attended the meeting, who asked not to be identified. A spokesman for Santa Clara, California-based Bay declined to comment. For NorTel, the purchase of a data-networking company like Bay ''is not out of the realm of possibilities,'' said Peter Nicholson, executive vice president of corporate strategy for NorTel's parent, BCE Inc. of Montreal. Northern Telecom and Lucent Technologies Inc., the two biggest makers of telecommunications equipment, are acquiring networking companies to expand their share of the fast-growing Internet market. Lucent bought Yurie Systems Inc. for $1 billion in April and Nortel purchased Aptis Communications for $290 million in March. Bay's profit and sales in the third quarter ended in March fell from the second quarter's, in the face of competition from larger rivals Cisco Systems Inc. and 3Com Corp. House could be willing to team Bay with a bigger company that doesn't yet sell computer-networking equipment to large businesses, analysts said. ''If there's an offer between $32 and $35 (a Bay share), the deal will happen,'' said Paul Johnson, an analyst with BancAmerica Robertson Stephens, who rates Bay ''buy.'' Bay shares today fell 5/16 to 24. At $35 a share, the company would be valued at $7.77 billion, or just over three times Bay's estimated revenue of $2.40 billion for the next four quarters. That price multiple is close to those of other large networking acquisitions, such as 3Com's 1997 purchase of US Robotics, said Chris Stix, a Cowen & Co. analyst who rates Bay ''buy.'' Bay would give NorTel a distribution system for networking equipment sold to large businesses, Stix said. ''It would be a good fit,'' Stix said. BEST WISHES BILL P.S. This really pushes LU to acquire ASCEND since their routers are some of the best in the business .