To: David Lawrence who wrote (15961 ) 6/10/1998 12:39:00 PM From: Moonray Respond to of 22053
Nortel May Purchase More Small Networking Companies, CEO Says Atlanta, June 10 (Bloomberg) -- Northern Telecom Ltd., the second-largest maker of phone equipment in North America, wants to buy small data-networking companies to improve its products for carrying Internet traffic, Chief Executive John Roth said. Roth declined to comment on speculation Northern Telecom may acquire Bay Networks Inc., though he said smaller companies are easier to integrate with Northern Telecom. Bay shares have risen about 30 percent in the past two months, driving its market capitalization to $6.71 billion. Northern Telecom is racing against rivals Lucent Technologies Inc., the largest U.S. phone-equipment maker, Alcatel Alsthom SA of France and others to help phone companies keep up with mushrooming data traffic. Nortel is looking at equipment makers that would give the Brampton, Ontario-based company high-capacity routers and other products for directing and carrying Internet traffic, Roth said. ''Our whole drive is to become a stronger player in (Internet) networks,'' Roth said in an interview at the Supercomm trade show in Atlanta. ''We continue to look at smaller firms; they're easier to digest.'' Big Companies, Too Still, Roth wouldn't rule out an acquisition of a larger, more-established networking-equipment maker like Bay. Northern Telecom is interested in products for networks that use Internet protocol, or IP, technology that transmit information in small pieces, allowing several calls to be carried at once. The company isn't looking at makers of asynchronous transfer mode, or ATM, switches and other products that Northern Telecom already has expertise in, Roth said. Northern Telecom shares fell 1/4 to 64 11/16 in late morning trading. In the past year, the company has acquired closely held Aptis Communications Inc. for about $305 million and Broadband Networks Inc. for about $400 million, and purchased smaller stakes in Plaintree Systems Inc. and others. ''We've been investing in about one high-tech company a month,'' Roth said. Separately, the executive said sales in Europe are expected to rise more than 10 percent this year as new phone companies enter the recently deregulated market. Last year, European sales, which account for more than 20 percent of Northern Telecom's total revenue, rose 15 percent to $3.5 billion. o~~~ O