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

To: Ian who wrote (6223)	6/4/1998 3:27:00 PM
From: Anthony Wong	Read Replies (2) \| Respond to of 6980

Bay Networks: Takeover Talk Heats Up Stock of the Day (Archive) Yahoo Online Investor Jun 04, 1998 Consolidation of the networking and telecom equipment industries is elevating to a manic pace, and the convergence of voice and data networking is like a tidal wave hitting the shore. So if you're competing in this market but didn't build your own arc or find a way off the beach, there's nowhere to run now - it's time to grab a life-ring and go with the flow. Bay Networks (NYSE:BAY - news) has been the subject of takeover speculation off and on for more than a year, but now a buyout seems almost inevitable. Bay Networks is no slouch in the data networking arena, with a strong lineup of new products and great success in capturing new accounts in the past year. Bay racked up sales of $2.3 billion over the past year. But ever since the company was formed out of the 1994 merger between SynOptics & Wellfleet (two networking leaders of that ancient era), it has struggled with execution. Size is increasingly necessary to compete with the networking giants like Cisco Systems (Nasdaq:CSCO - news) , 3Com (Nasdaq:COMS - news) which merged with US Robotics last year, and Ascend (Nasdaq:ASND - news) which merged with Cascade last year. And while these data networking companies learn to dance together, on the other side of the curtain the voice networking companies were doing the same. Now it's as if the curtain between the two has been lifted, allowing voice and data networking companies rush to partner up. The latest merger was a $7 billion marriage announced Tuesday involving Tellabs (Nasdaq:TLAB - news) and Ciena (Nasdaq:CIEN - news) . Just a month or so earlier, Lucent Technologies (NYSE:LU - news) bought Yurie Systems for $1 billion. And just a few weeks ago Bay Networks revealed that it had rejected a takeover offer from Northern Telecom (NYSE:NT - news) . NorTel is still thought to be a potential suitor because it's such a natural fit, so there is still speculation about whether NorTel may just raise its bid. Another oft-mentioned potential bidder for Bay is Ericsson (Nasdaq:ERICY - news) , the Swedish telecom giant. And Lucent, though it just spent a billion on the Yurie acquisition, has the resources to still be a potential bidder for Bay. Betting on takeovers, no matter how likely they seem, is a risky and speculative endeavor. A variety of factors can crop up to prevent a potential merger from occurring - everything from the buyout price to clashes in management style - so there is no such thing as a sure bet. Furthermore, there's no guarantee that the buyout will be for more than the current stock price, especially if the share price of the acquired has run up in anticipation of a buyout. At $28, Bay is up from its $21.18 low in April, but still well below its 52-week high of $41.87. Perhaps a bigger risk would be if Bay is left to swim on its own. Granted it is making a few acquisitions of its own, but competing against the likes of Cisco, 3Com, Lucent and NorTel would be a tall order. fnews.yahoo.com