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

To: Maverick who wrote (5798)	5/13/1998 2:32:00 PM
From: Anthony Wong	Read Replies (1) \| Respond to of 6980

The Motley Fool - By the Bay fnews.yahoo.com FOOL PLATE SPECIAL An Investment Opinion by Dale Wettlaufer By the Bay Bay Networks (NYSE:BAY - news) jumped $3 1/2 to $27 1/2 this morning after the company said that it has rejected a takeover offer from telecom equipment powerhouse Northern Telecom (NYSE:NT - news) . That another company would be interested in Bay's products and customers is not surprising, given that Bay's stock price performance over the last two years is not indicative of the quality of its products. According to data-heads, Bay's product quality is not an issue. What's at stake for shareholders is whether the company's management can turn that product quality into shareholder value going forward. Sure, Bay had increased in value by about 60% (before the NorTel offer was revealed) from the depths of an 18-month depression reached in the spring of last year. With new management taking control of the company last year and product wins under its belt, especially in the local area networking ATM space and in enterprise routers, the company told its employees around this time last year to be prepared for Bay to be a $100 stock. There hasn't been a split since that time, though, so the company is about $75 short of that target. Consequently, the news about NorTel isn't just a rumor, it's a pretty good indication that the company is being shopped and will be sold if the price is right. When it comes to technology companies, it's not always the technology that dictates growth in shareholder value. Sure, Cisco Systems (Nasdaq:CSCO - news) can come along and acquire a company with great technology and no revenues for $300 million in Cisco stock, but for a large-cap company, it's no longer the technology alone that dictates shareholder value. It's how well the company executes, which can be things like management skill and how well employees are motivated. For a huge company, NorTel has generated a very respectable return to its shareholders of better than 18% per year over the last seven years. If it can cough up another billion dollars or two for Bay shareholders and fill out a giant hole in its data networking product line, where now it's pretty much an integrator of other companies' products, Bay Networks won't be long for this world as a separate publicly traded company.

To: Maverick who wrote (5798)	5/13/1998 2:42:00 PM
From: Anthony Wong	Respond to of 6980

BAY NETWORKS SAID TO BE UP FOR SALE; STOCK UP 15% May 13, 1998 1:55 PM By Mark Boslet and Joelle Tessler NEW YORK (Dow Jones)--Bay Networks Inc.'s (BAY) days as an independent company could be numbered. Wall Street analysts and one investment manager said rumors are circulating that Bay Networks has instructed its investment bankers to prepare financial documents about the company to show potential buyers. Bay officials were not immediately available for comment. Speculation that Bay is up for sale is not new, but the market talk intensified Wednesday after Bloomberg News late Tuesday reported that the company rejected an acquisition offer from Northern Telecom Ltd. (NT) as too low. Earlier Wednesday, Bay officials declined to comment on that report. Northern Telecom also declined comment. Bay Networks' NYSE-listed shares were recently up 3 5/8, or 15.1%, at 27 5/8 on volume of 11,376,500 compared with an average daily volume of 4,230,200. Telecom Equip Makers Seen Interested In Co. Bay Networks appears to be willing to consider takeover offers from interested suitors, analysts said, as it tries to position itself to better compete with networking industry giant Cisco Systems Inc. (CSCO). "The company is open to looking at everything and anything," said one buy-side technology analyst. "They're looking at all options." Many analysts have speculated that Bay could merge with a large telecom equipment maker. Cowen & Co. analyst Christopher Stix noted that Bay Networks would give a telecom equipment company channels into the enterprise market as well as "the only credible carrier router" alternative to Cisco's product. The companies considered most interested in Bay Networks include Northern Telecom, Alcatel Alsthom (ALA), Ericsson Telephone Co. (ERICY) and Siemens AG. Analysts say these companies may want to make a bid for Bay before October, when Lucent - also seen as a likely suitor - would be free to do a pooling of interest acquisition. Lucent is currently prohibited from making pooling of interest deals because it was spun off from AT&T Corp. (T). The acquisition rumors, which have circulated for weeks, have also mentioned Compaq Computer Corp. (CPQ), Intel Corp. (INTC) and Fujitsu Ltd. as possible suitors, although these companies are seen as less likely possibilities. A $36-a-share price tag has been repeatedly named as a likely takeover price for Bay. One analyst noted that Bay's shares were trading in the low $30-a-share range before the company said in mid-March that it would miss earnings expectations for its fiscal third quarter, which ended in March. Stix said he believes the company would be worth something in the mid-$30 range in a takeover. He said a price between $30 and $35 a share for Bay would be equal to roughly 3 times the $2.4 billion in sales he projects Bay will do in calendar year 1998. The company's disappointing earnings outlook, which helped reignite the takeover talk, highlighted that Bay was have some trouble in ramping up its new line of Accelar routing switches and that it faces a lot of competition in the market for low-end workgroup switches. Several analysts said that while Bay Networks Chief Executive David House did not discuss any specific merger options at Networld+Interop trade show last week, he did tell analysts that the company would allow shareholders to decide whether to sell. - Mark Boslet; 650-496-1366 - Joelle Tessler; 201-983-5285