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

To: djane who wrote (5955)	5/19/1998 2:47:00 AM
From: Greg Jenkins	Read Replies (2) \| Respond to of 6980

This is what A G Edwards analyst had to say: (05/13/98) Buyout Rumors The sky is filled once again with rumors about the take out of Bay Networks. Please note that rumors have been surrounding the eventual take out for years. Even before SynOptics and WellFleet merger, WellFleet was rumored as a take out candidate. However, in a Bloomberg article this morning it stated that David House (Bay's President and CEO) told analysts at a meeting last week that he would let shareholders decide whether to sell. In addition it stated that Bay told analysts that it rejected an acquisition offer from Northern Telecom that was too low but would consider higher bids from NT or others. We were at this meeting last Tuesday and no announcement like this was made. The meeting was rather sanguine and discussed mainly products and results in the next two quarters. We are obviously questioning the company further and if anything develops and we will put it in the system immediately. While we have no doubt that the company has talked to NT and other large companies, no official statement about merger activity has been issued yet. We believe that Bay has a good long-term business plan but is currently being derailed by pricing, competition, lack of a broad product line and a general slowdown in the area. The biggest negatives are that 25% of its business comes from shared media, which is a rapidly declining market, and the lack of a full product line. We do believe that Bay will get back on its feet but we want to wait and see some evidence before we return to a positive rating. This brings up a bigger issue which we have been talking about for some time and that is with valuations very high on the voice networking side (LU, NT etc.) and those guys wanting into the data networking side (BAY, ASND, COMS etc.) why now look at making a big acquisition. Both of these markets are on a collision path and we believe that this will be one of the biggest battle grounds in the next 3 to 5 years. We believe that Bay, Ascend and likely 3Com (one which we have not heard anyone mention yet) will be potential take out candidates and that news of this could be the think that we have been waiting for to get investors interested in networking stocks again. Once again, we did talk to the company and they stated numerous times that this is just a rumor and if they had gotten an offer from any company, there are rules that would require them to disclose it. Just thought I would throw this in to the discussion. Greg J.