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

To: Ken Twining who wrote (6214)	6/4/1998 11:26:00 AM
From: Frank Ferrari	Respond to of 6980

BAY is up, Nortel is down, looks like someone thinks a deal is imminent. Supercomm on June 8th? Frank

To: Ken Twining who wrote (6214)	6/4/1998 11:27:00 AM
From: m thompson	Read Replies (2) \| Respond to of 6980

from WSJ re merger/DSC June 4, 1998 Alcatel to Buy DSC Communications In Stock Swap Valued at $4.4 Billion Dow Jones Newswires French electronics group Alcatel Alsthom SA Thursday announced plans to acquire telecommunications-equipment maker DSC Communications Corp. for about $4.4 billion in stock. Shares of Plano, Texas-based DSC advanced 4.7% to $19.6875 Wednesday on speculation that DSC would become the next telecommunications-equipment maker to be acquired in the wake of Tellabs Inc.'s planned $7.1 billion acquisition of Ciena Corp. Alcatel will exchange 0.815 of an American depositary receipt, or ADR, for each DSC share. Alcatel's ADRs settled at $43.438 Wednesday. At that level, the deal values each of DSC's 125 million shares outstanding at about $35.40 -- a rich 80% premium over Alcatel's closing price on Wednesday. Alcatel's ADRs slid in the wake of the deal's announcement, falling $3 to $40.4375 in early trading Thursday on the New York Stock Exchange. DSC's shares soared on the news, jumping $9.4375 to $29.125 on the Nasdaq Stock Market. DSC has long been rumored as a takeover target, but the Tellabs-Ciena deal, announced Wednesday, renewed speculation about other telecommunications-equipment companies. Only a few days after DSC warned it would post a surprise first-quarter loss, it then, last month, announced that James Donald would retire as president and chief executive officer but remain chairman. Analysts have been critical of DSC's management and applauded the move. DSC makes products very similar to those made by Ciena and Tellabs. Last month, Bell Atlantic Corp. awarded $1.5 billion in contracts to five companies, including DSC, for equipment and software to upgrade the Baby Bell phone company's networks to handle data and video traffic. About $500 million of the total was spread between DSC, Ciena and Tellabs. DSC won a contract to provide so-called cross-connect systems that help to route voice and data traffic through different types of network equipment. The proposed Alcatel-DSC deal has been approved by the boards of both companies and is expected to close in four months. The companies expect annual savings of about $200 million. The marriage would underscore Alcatel's efforts to remake itself into a focused telecommunications-equipment company. The company's earnings soared 74% last year to 4.7 billion francs ($792.2 million) as revenue advanced 15% to 185.9 billion francs, largely because of a sharp improvement in its telecommunications division. DSC had revenue of $1.6 billion last year. Serge Tchuruk, Alcatel's CEO, said, "Alcatel's strategy is to be a pre-eminent world-wide player in the evolution of networks from narrowband to broadband, with voice/data convergence." Indeed, it is that convergence that has driven many mergers in recent weeks. The voice- and data-networking industries are rapidly converging as companies in both sectors join forces. In addition to the Ciena-Tellabs deal, Canadian telecommunications-equipment firm Northern Telecom Ltd. Wednesday announced plans to buy a 19% stake in data-networking firm Plaintree Systems Inc., the latest in a string of purchases. Lucent Technologies Inc., the big equipment maker spun off from AT&T Corp., has also been buying networking firms. The telecommunications-equipment companies are beefing up their assets to challenge big data-networking companies such as Cisco Systems Inc., which has been making inroads in the telecommunications-carrier market.