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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: StockMan who wrote (14536)	6/16/1998 8:28:00 AM
From: Zoltan!	Respond to of 77400

...But some analysts and investors suggested Nortel offered too much -- a 35% premium based on both companies' closing prices Friday -- for a company that has struggled to keep up with networking behemoth Cisco Systems Inc. Others questioned the wisdom of Nortel's move into the fiercely competitive corporate data-networking business when growth appears to be shifting to the public-carrier market, a segment Bay scarcely serves... But upgrading Bay's existing product line for use by phone companies won't be easy. The companies need "to make these technologies to the scale that the big carriers need and to make them rugged enough," Nortel's Mr. Roth said. "The challenge is to move ahead just as rapidly as possible." Bay itself provides an interesting glimpse into just how hard it can be to merge data-networking companies. It was formed by the merger of SynOptics Communications Inc. and Wellfleet Communications Inc. in 1994, when both were fast-growing networking companies situated on opposite sides of the country. But their distant locations proved to be a major obstacle to the merger ever living up to its promise; executives had a difficult time melding the two cultures and product families into one. Bay's chairman and chief executive, Dave House, was brought in to run the company in late 1996 from Intel Corp. Based on his strong marketing and operational background, investors initially thought he could turn Bay around and make a run at Cisco. But Cisco, rather than slowing down, began pulling ahead, leaving Bay and others far behind. Meanwhile, Bay stumbled. Earlier this year it said its fiscal third-quarter results would fall short of analysts' estimates, owing to weak demand. The company ended up reporting a $144.2 million loss, or 66 cents a share, on sales of $547.1 million. Thus it came as little surprise to analysts when Bay executives backed away from an earlier pledge to remain independent. Mr. House said he realized Bay needed a way to get its technology into the public-carrier market quickly. Nortel, one of the leading suppliers to phone companies, offered those distribution channels. "It became clear that it was in the best interest of the employees, the customers and the stockholders that we do this transaction," Mr. House said. interactive.wsj.com!BT06/15++4498!BT06/15++3791!&time=06/16+02:03