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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: gbh who wrote (47190)	5/20/1998 3:38:00 AM
From: bucky89	Read Replies (1) \| Respond to of 61433

Hi again Gary: Livingston and ASND RAS/RAC are pure overlap. I've thought about this, and I wonder if the purchase of Livingston is part of LU's negotiating tactic. With Livington, they not only get some experience in RAC's, but also improve LU's position at the negotiating table with Ascend. With Livingston, LU can threaten to compete with Ascend, instead of acquire them if the asking price is too high. The price for Livington ($600M?) would be a hugely positive ROI if they get Ascend (market cap ~$9B) to reduce their asking price by even 10%. Also, Ascend has market share and Livingston doesn't. This is not a commodity market like PC's, and you can't buy market share so easily by reducing prices. Yurie's main product (only product??) is an ATM concentrator. A relatively small box that takes DS0, DS1, T1/E1, and maybe T3/E3 and funnels all data into an ATM stream(1.5, 45, or 155). This is a direct competitor to ASND SA line. Yurie's product is a small ATM switch. If you want call it an "ATM concentrator", then that's your perogative, but I doubt very many customers are using it as such. This is clearly a product for the enterprise market, not the carrier market. I don't see any use for this device in the carrier market. No carrier I know of sells T1 or smaller ATM pipes--it's too inefficient and expensive and frame relay is a much better solution. Rather, as an enterprise customer, I would use the Yurie switch to multiplex voice and data VC's in my international 3Mbps ATM connection. There are other potential enterprise applications if I think hard enough. I don't know much about Sahara, but Ascend's weak presence in the Enterprise market might be one reason for Sahara's lack of success. No carrier wants a small ATM switch. With Ascend, LU would market the Yurie product for corporate customers and Ascend's CBX500 and GX550 for carriers. No real overlap here. At this point, FORE may be a better fit for LU than ASND. They would get quality ATM, and E-NET switching to boot. Still have the overlap with an ATM concentrator though. That Yurie purchase still has me puzzled. Maybe they just will continue with relatively small purchases, just a lot of them. FORE is a supporter of the ATM forum and MPOA, which is a very clumsy and unscalable way of mapping IP to ATM. The carriers have unanimously rejected this approach, and seem to be favoring Ascend's MPLS technology, at least for the moment. LU's primary customers are carriers. If you had to choose a product portfolio, wouldn't you choose the products that your favorite customers are craving for??? Just my $.02. I see a very compelling reason for Lucent to acquire Ascend. With a shopping budget of $30B, Ascend would be the very first company I would pick up if I were Lucent. bucky89