Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: rupert1 who wrote (6370)	6/9/1998 8:14:00 PM
From: Anthony Wong	Read Replies (3) \| Respond to of 6980

Yes, there is a downgrade (from "buy" to "sell", how drastic!) news.com

To: rupert1 who wrote (6370)	6/9/1998 8:26:00 PM
From: George A. Roberts	Respond to of 6980

Top Stories: Bay Rides the Takeover-Talk Roller Coaster By Kevin Petrie Staff Reporter 6/9/98 5:51 PM ET Where there's smoke there's fire, or at least a bunch of people in a haze. In the last month, one takeout rumor after another has lifted the shares of struggling networker Bay Networks (BAY:NYSE), each only to prove premature, at the very least. Supposedly Northern Telecom (NT:NYSE), Lucent (LU:NYSE) and Ericsson (ERICY:Nasdaq ADR) all are in the bidding and one will pay 36 to 40 a share for Bay in a bid to spring from the phone-gear business into the Internet. Even the chip giant Intel (INTC:Nasdaq) might make a play, according to the talk. With this much talk it's likely that Bay at least has had talks with suitors. After all, Wells Fargo (WFC:NYSE) was the subject of takeover speculation for weeks -- during which its stock would periodically run up -- and yesterday it unveiled an agreement to merge with Norwest (NOB:NYSE). And selling out probably offers Bay the best prospects for long-term survival, though obviously not as an independent entity. Still, many investors are wagering on ether so far, and there's even speculation -- yes, more speculation -- that some investors are spreading rumors just to make a quick buck. But none of this has stopped the babble. As far back as May 1, PC Week said Nortel and Lucent "appear to be in hot pursuit of Bay." Nearly two weeks later, Bloomberg pushed the stock up 16% to 27 15/16 by reporting that Bay had told analysts that it rejected a bid from Nortel as too low. Bay denied the report, and the stock slipped in later sessions. In the weeks that followed, both shares and options of Bay have run a roller-coaster course, screaming higher as rumors fanned optimism and then retreating on the rumors' demise. Heavy options activity June 4 and June 5 signaled renewed optimism about a potential deal; the stock added nearly 10% in those two sessions. Several money managers even have phoned TheStreet.com to notify reporters of deal speculation, at least one speaking of a likely announcement after Monday's close. In fact, Monday was an all too typical trading day for Bay. It dipped early in the day, then surged from 29 3/4 at 1:50 p.m. to 32 1/2 at 3:40 p.m. on speculation that after the market closed Nortel would disclose plans to purchase Bay for 36 to 38 a share. The stock closed at 32 1/4; more than 8 million shares changed hands. Of course, no deal was announced. Then today, the Financial Times quoted sources saying that Morgan Stanley Dean Witter is shopping Bay to U.S. and European telecom suppliers. At least someone is apparently making money. "Thanks longs . just put $3,800 of your hard earned, rumor money, in my pocket this a.m. . keep up the good work!" reads a message from RBHouston posted on a Yahoo! message board early Tuesday. "People started the rumor so that they can cash in their money," an investor called TradeYourPosition warned on Yahoo late Monday. "This stock will never make you rich if you do not cash in now." A lucid trader who handles Bay's stock figures a couple of investment shops are starting the rumors. While the trader says Bay likely will be acquired, he finds the recent speculation dangerous. "Bay could say, 'No one's buying us, and by the way, we're blowing the quarter,'" the trader says. "Or worse yet, nobody wants to buy us, and we're blowing the quarter." The trader remembers losing a "pretty penny" trading calls of Quaker Oats (OAT:NYSE) in 1993. Each month a rumor surfaced that Quaker would be bought; it didn't happen. Quaker Oats left a bad taste in his mouth. The trader instead says a safer play is buying Cabletron (CS:NYSE), another addled networker that has risen along with Bay. At 13 a share, Cabletron has less downside. In the midst of all this, however, the trader worries that people are missing another rumor -- that Bay will miss its number in the June quarter. A First Call survey of analyst estimates says Bay will earn 12 cents per share in the June quarter, compared with operating profits of 15 cents one year ago. A Bay spokesman declined to comment on its earnings or the possibility of a takeout. And Bay's stock? It closed off 1 9/16 at 30 11/16. * * * * * Separately, Bay is expected to announce Wednesday that it has shipped a test batch of cable modems and related network equipment to MediaOne (UMG:NYSE), formerly U S West Media. Bay has given the products the Versalar brand name. The size of the contract couldn't be determined, but MediaOne intends to deploy the systems in the fourth quarter. Bay is one of the first networkers to ship cable modems that are based on a common standard called DOCSIS; all told it has shipped more than 200,000 cable modems. Data networkers are lured to this emerging market because the network gear that goes along with cable modems carries nice profit margins.