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To: Jorj X Mckie who wrote (47200)	5/19/1998 11:30:00 PM
From: Yiota	Respond to of 61433

Technology News Tue, 19 May 1998, 8:57pm EDT BN 5/19 Networking, Telecom Companies to Chart Future at Vortex98 Networking, Telecom Companies to Chart Future at Vortex98 Dana Point, California, May 19 (Bloomberg) -- Executives from computer networking and telecommunication companies will gather at the Vortex98 conference this week for talks that may determine who provides consumers and businesses with phone and Internet services in the next century. As the two industries rapidly converge into a single market, phone-equipment giants like Lucent Technologies Inc. and Northern Telecom Ltd. and networking leaders Cisco Systems Inc. and 3Com Corp. will convene with telecom service providers at the conference in Dana Point, California. Phone companies and Internet service providers including AT&T Corp., WorldCom Inc. and the Baby Bells want new equipment so they can offer customers more sophisticated -- and profitable -- Internet services, and Northern, Lucent, Cisco and 3Com want to sell them the gear. As these companies and others look to fill holes in their technology and product lines, a wave of mergers is expected to begin as early as next month. ''Everyone is moving to the same spot from different parts of the network,'' said Fred McClimans, an analyst at market- research firm Current Analysis in Sterling, Virginia. All the Pieces The first company to put together all the pieces required to combine voice and data traffic on a single network will have a jump on a market predicted to reach more than $50 billion annually within five years. To that end, Northern Telecom and Lucent, which traditionally have sold equipment to carry voice traffic, began acquiring data networking technologies last year. In the past two months both companies have upped the stakes, with Lucent dropping $1 billion in cash to buy closely held Yurie Systems Inc. and Northern Telecom spending $290 million for Aptis Communications Inc. Still, even those acquisitions may pale in size compared with what's ahead. McClimans said Lucent and Northern bought the firms, whose products make it easier to combine voice and data, ''to play with the technology. Those are just precursors to larger deals that will happen this year,'' he said. Both companies, along with European rivals Ericsson AB and Alcatel Alsthom SA, have said they're interested in more data acquisitions. Bay Networks Inc., Ascend Communications Inc. and Cabletron Systems Inc. all are seen by industry analysts as potential takeover targets because their products would fill important technology holes at the leading telecom companies. Ultimately, it will be more than technology that determines which companies are bid for. The consolidation of the voice and data-networking industries also will be built on established relationships and products, one analyst said. ''It's about owning distribution channels and having access to a customer base,'' said Scott Heritage, an analyst at UBS Securities. The companies left standing after the expected spate of mergers will determine the future of the telecommunications industry, Heritage said. Also on hand at Vortex98, which runs tomorrow to Friday at the Ritz Carlton Laguna Niguel, will be venture capitalists and investment bankers who specialize in networking technologies. --John Shinal in the San Francisco newsroom (415) 912-2995/jac ------------------------------------------------------------------------ c Copyright 1998, Bloomberg L.P. All Rights Reserved.