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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Clay Takaya who wrote (51096)	7/31/1998 6:11:00 PM
From: D.E. Lee	Read Replies (1) \| Respond to of 61433

I'm curious about the logic driving the assumption that just because ASND buys SRA, LU won't buy ASND. Or, to put it more precisely, that the SRA/ASND rumor takes the premium out of the LU/ASND rumor (over more than the very short term). It would seem to me that: 1. The LU/ASND buyout, while perhaps likely, is by no means guaranteed. It would be short-sighted for ASND to, in the meantime, not position itself for the future by making whatever strategic acquisitions it deemed necessary (whether SRA would be a good acquisition is, of course, another issue altogether). Thus, any acquisitions by ASND, while not exactly hanging a "FOR SALE" sign on the door, don't do much to preclude its future acquisition. 2. If ASND did buy SRA, this does not change the fact that it is widely perceived that LU still must make a major acquisition in the data networking field. Wouldn't ASND, even an ASND with SRA, still be one of the best, if not the best possible fit for LU? After all, LU could still spin off parts of SRA if necessary -- what's a few hundred million these days, anyways? These two things suggest to me that we'll see the takeover premium rebuild itself into the stock price, whether or not these rumors are true. Personally, I'd buy ASND on its current fundamentals, no matter what I thought of the takeover prospects. DL

To: Clay Takaya who wrote (51096)	7/31/1998 6:30:00 PM
From: The Phoenix	Read Replies (2) \| Respond to of 61433

Clay, I'm not sure we'll see a bounce Monday either but here are a few things to think about. Yes, SRA is in slow growth market, but that's because they haven't targeted the new data/voice convergence space - where all the growth is. ASND will take them there. ASND lost $1.2B in market cap on a $500M acquisition (that's $800M less the $300M SRA holds in cash). In effect if we assume SRA generate no earnings - ever - they lost $3 for the acquistion and $4 in change for lost speculation on a LU takeover. Again, this assumes SRA does NOTHING for ASND. Hard to believe. SRA brings more than SS7 to ASND - ASND would not have bought them for this as they have SS7 signaling technology already. They need the IN and SCP stuff...this will be important going forward. As much as folks think Mory made a boneheaded move (and you all know I've never been a big fan of Mory) this deal isn't all that bad. Mory is positioning the company for the future - for the long term...you can't sit on your hands in this industry or you'll get run over. So, it may seem like Mory doesn't care about the investors but this is the very reason he's making this move - long term growth. Sell off - could also be due, in part, to the CSCC experience. Some MM's don't want to sit around and wait. Face it, most MM's don't have a clue and take their lead from other analysts that don't have a clue. In the end this pup sold off waaaay too much. When they announce they'll explain the synergies and the stock may not bounce - may even go lower - but I suspect it won't. I think we'll be back next week if for no other reason than for the fact that this was an overreaction on the market. Hey - it's stinkin $800M for gosh sake! One problem Mory and ASND do face is that SRA has 2500 employees - too many in my estimation. I'd love Mory to come out and say we're buying SRA and we're offering early retirement for 1000 employees in order to eliminate overlap and reduce expenses. THAT would be huge! OG