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Technology Stocks : Cabletron Systems (CS: NYSE) -- Ignore unavailable to you. Want to Upgrade?

To: Sparky65 who wrote (3728)	5/29/1998 5:33:00 AM
From: Harold S.	Respond to of 8358

If anything, CS has products far exceeding FORE"s when they went into the tank. As far as ASND, ASND probably has an advantage on CS when making a comparison of their product advantages at a time like now in comparison to when ASND was in the tank.

To: Sparky65 who wrote (3728)	5/29/1998 7:16:00 AM
From: J Bertrand	Read Replies (2) \| Respond to of 8358

sparky, As you know, I think a takeover in the high 20's is too low. Here's my thinking. If Bay goes at $40 a share, that's $8.84 billion. Bay's current sales are $2.2 billion. If you times that by a multiple of 4x sales, you get the $8.84 billion. With Bay gone, there are fewer big networkers left. This means scarcity. This means the price goes UP for the rest. Companies will scramble to buy the rest of the networkers so they don't fall behind. Now for Cabletron... You add 1.8 billion in sales x 4X multiple plus scarcity and you get $7.2 to $7.5 billion for Cabletron. At $7.5 billion, $47 a share after you divide 159 million shares in the $7.5 billion. But, lets be way more conservative. Let's say that Cabletron's sales are valued at $1.3 billion, they get a 4x multiple and we drop the scarcity idea...you are still talking about $32 a share. When I say 1.3 billion, I am assuming no worth to Yago, the Digital acquisition and no premium for Spectrum. Pretty ridiculous huh? These numbers aren't a pipe dream. They are all based on what Bay gets for its business so we all better be routing for a huge premium for Bay. I am! I think I check the Bay board more often than this one. Valuing Cabletron isn't just what its worth on paper, but what others are willing to pay and have paid for similar businesses. Basic real estate 101. Now, lets be a little less conservative and add to the formula a CEO who is part of the Forbes 400 and understands Cabletron's position in the marketplace. I mention the Forbes 400 because I am assuming he doesn't need the money so he will be tougher in the negotiation. Assuming a premium for Spectrum and Yago and the realization of Digitals sales plus scarcity, plus CEO's position on Forbes and what do you have? I say $42. That's my bet for Cabletron. Understanding the position of a an asset in the marketplace is how savy investors make a lot money. Take care Jeff