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

To: vibaby who wrote (6820)	7/5/1998 6:26:00 PM
From: Kenneth E. Phillipps	Respond to of 6980

Bay expected to have largest increase in sequential margins (2%) Of course, last quarter margins were lousy. Copied from the 3com thread To: Joel Gander (18657 ) From: Glenn D. Rudolph Sunday, Jul 5 1998 3:58PM ET Reply # of 18661 Investment Highlights: n Revenues: * We expect FORE Systems (FORE, $25 7/8, C-2-2-9) to report the strongest revenue growth with an increase of 47%. * We estimate that ODS Networks (ODSI, $6 §, C-3-2-9) will have the most significant revenue decline. n Gross Margins: We expect gross margins for most data networking companies to be flat on a sequential basis, with Bay Networks (BAY, $31 9/16) having the largest increase (2%). n EPS: * For the June 1998 quarter, we estimate that on a weighted average basis, EPS growth rates will increase by 10% for the data networking companies reporting, excluding BNYN (BNYN, $7 7/8, C-3-2-9) and GDC (GDC, $4 15/16, D-3-3-9). * We expect FORE Systems will report the strongest year-over-year EPS improvement with an increase of 162%. n Price/Earnings Ratios: The weighted average of P/E ratios for our universe of data networking companies is currently 29-times calendar 1999 EPS estimates (excluding GDC and ODSI). This compares to the current S&P 500 multiple of 23-times Merrill Lynch's 1999 EPS estimates. n Recommendations: * Our focus stock for 1998, Cisco Systems (CSCO, $93 5/8, C-2-1-9) is currently growing faster than most of its competitors, and therefore continues to gain market share. Other Recommendations Include: * After four consecutive quarters of a year-to-year decline in quarterly EPS at Ascend (ASND, $49 9/16, C-2-2-9), we are forecasting EPS growth of 50% in the September 1998 quarter. * We believe that 3Com (COMS, $30 11/16, C-2-2-9) and Novell (NOVL, $12 ‘, C-2-2-9) both have opportunities to improve gross and operating margins during the next several quarters. * We expect FORE Systems' 40 gigabit switch to have gross margins higher than the corporate average and to contribute potential revenues Bulletin United States Telecommunications Equipment/Networking 1 July 1998 Joseph J. Bellace First Vice President Mark Lipacis Industry Analyst Data Networking Anticipated EPS for the June 1998 Quarter Reason for Report: Recent Business Trends Merrill Lynch & Co. Global Securities Research & Economics Group Global Fundamental Equity Research Department RC#10218219