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

To: Kenneth E. Phillipps who wrote (5858)	5/14/1998 6:02:00 PM
From: Paul Fine	Read Replies (2) \| Respond to of 6980

As of now, Bay is up purely on takeover speculation. No one has come out and said the fundamentals this qtr(eg., sales and/or earnings) are going to beat expectations. As to a takeover price, the price to sales ratio is simply one method of calculation. Bay does not deserve the 10x that cisco has. Sales are nice, but cisco has considerably better margins and delivered $.45/share last qtr vs. Bay's $.04. Cisco is growing and Bay has once again stalled. However, getting 5x p/s on the basis of products and technology, plus the law of supply and demand(more telcos need a big networker than there are big networkers available) would give a takeover price of about $50+ or so. This is 20% above Bay's alltime high and would be a slamdunk with mgmt and shareholders. If Bay can deliver decent numbers in mid-July, we have a chance at a good multiple. However, if they miss this qtr too, you will see even more bottom-fishers like Nortel(assuming the rumors were true). That is my concern, expressed before, that this is exactly the wrong time for Bay to blow the numbers if they wish to maximize shareholder(and their own) value. That is what happened with SynOptics(yes, I am beating that old horse again) and I would hate to see it happen here. I understand people can have different investment objectives, and some would like to see a buyout at the low $30's if they just got in at $23. I just am not one of them. In any case, anyone want to give me odds on whether I will get to use the airline tickets I already bought for the third week of October to San Jose for the Bay annual meeting? More to follow, I am sure. Paul