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.

Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: j g cordes who wrote (16674)	6/20/1998 5:50:00 AM
From: Johnny Canuck	Respond to of 69181

Canadian Financial Post Saturday, June 20, 1998 Nortel-Bay deal may leave Plaintree in lurch By JILL VARDY Technology Reporter The Financial Post ÿOTTAWA - Northern Telecom Ltd.'s planned purchase of Bay Networks Inc. could sweep aside Nortel's interest in tiny Plaintree Systems Inc., analysts warn. ÿ"This looks ominous for Plaintree," said Albert Daoust, special products director at Evans Research Corp. "There's some interesting things in Plaintree's product suite, but it's going to be very hard for them to get any mind-share at Nortel." ÿNortel took a 19% stake in the smaller company three weeks ago. Plaintree's gigabit ethernet switching equipment for sending data signals, competes with some Bay products. Nortel says it's too early to tell how the Bay deal, if consummated, will affect Plaintree. ÿ"It could be positive; it may not be. We don't know yet," said Klaus Buechner, senior vice-president of corporate strategy and alliances at Nortel. ÿBuechner said Nortel is interested in Plaintree's expertise and the use of their products in the telecommunications market. ÿThomas Branca, Plaintree's chief financial officer, said the Bay-Nortel link shouldn't affect that interest. ÿ"At this point, we don't see anything negative in it," said Branca. "We view our products as complementary to Bay's ... we feel there's room for both product sets within Nortel." ÿHe said Bay's integration with Nortel's network enterprise business is different from Plaintree's partnership with the broadband division. "There are two different Nortel operating groups driving two different partnerships." ÿBut analysts say Nortel, which will pay US$9.1 billion in shares for Bay, based on Nortel's share price when the deal was announced Monday, will concentrate on integrating and exploiting Bay. The purchase was Nortel's biggest step yet in its quest to become a top-tier player in the data communications market. ÿOn June 3, Nortel announced it was taking a 19% stake in Plaintree, which has never had an annual profit. Plaintree had been seeking a large telecommunications equipment company to buy it or distribute its new gigabit ethernet switch. ÿ"It now seems be very unlikely that any Plaintree products would be resold by Nortel, Daoust said. With Bay, Nortel is acquiring a very large company with an extremely broad product line, considered to be a technology leader in the very market that Plaintree's in." Daoust said. ÿBuechner confirmed Nortel has signed no distribution agreement with Plaintree as part of its stake in the company. ÿPlaintree stock (LAN/TSE) closed Friday down 10› at $2.60 in Toronto. Nortel shares (NTL/TSE) closed up 15› at $77.85. ÿ