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

To: djane who wrote (51561)	8/4/1998 3:20:00 PM
From: djane	Respond to of 61433

Boston Globe. New owner will break up Stratus boston.com By Ronald Rosenberg, Globe Staff, 08/04/98 Stratus Computer Inc., a pioneer maker of failsafe computer systems that was founded 17 years ago, will soon be dismantled following its $843 million acquisition by Ascend Communications Inc. The merger of Stratus of Marlborough and Ascend of Alameda, Calif., was announced yesterday after being widely rumored last week. It is the latest in a string of deals among computer networking and telecommunications companies as the Internet explosion leads to a convergence of voice and data communications. Ascend, a maker of data networking switches, is buying Stratus primarily for its technology and products sold to telephone carriers to manage their networks and blend voice and data traffic. That business unit of Stratus - one of four - had $220 million in revenue last year. After the $843 million stock swap is completed in the late fall, Ascend will sell Stratus' three remaining business units - with $466 milliion in 1997 revenue - as well as Stratus's corporate name. ''We have had several active inquiries from companies looking into what we plan to divest. I just cannot name them now,'' said Bruce Sachs, Stratus president and chief executive. Sachs had been shifting the company into telecommunications since becoming chief executive in May 1997. The acquisition will lead to a series of employment changes at Stratus. About 500 jobs will be terminated, including 350 that were targeted last month when the company announced a 20 percent drop in revenue for the second quarter. That would leave Stratus with about 1,900 employees. Only 400 to 450 of those employees will become part of Ascend, while the other 1,500 would join the company or companies that eventually acquire the bulk of Stratus, said Sachs. Sachs said that of the 500 who will lose their jobs - half of them in Massachusetts - some will be considered for new jobs at Ascend, which has its East Coast headquarters in the Westford offices of the former Cascade Communications Corp., a computer networking company Ascend acquired last year for $3.7 billion. After the Stratus acquisition and divestitures and some additional hiring by Ascend, the California company will have more than half its work force in Massachusetts, Ascend said.[I'm glad ASND isn't afraid of cross-country mergers.] To buy Stratus, Ascend will swap 0.75 of its shares for each of Stratus' 24 million outstanding shares, excluding options. Based on Ascend's closing price yesterday of46 13/16, up 2 11/32, the deal values Stratus at $35.11 a share, which is slightly higher than Stratus' closing price yesterday of $33.75. Stratus shares rose 4 7/8 in very heavy trading yesterday. The premium has dwindled considerably since last week when rumors of a pending deal leaked out, causing Stratus shares to rise and Ascend's to fall. Analysts who were skeptical last week were more positive about the deal yesterday. The acquisition of key Stratus technology will enable Ascend to better compete against larger rivals such as Lucent Technologies Inc., said analysts. Ascend is mainly buying Stratus for its products and services for telephone carriers. It is a leading supplier in that market, selling to 27 of the 30 largest players. Stratus sells them specialized computers and software that run Signaling System 7 technology, or SS7, which enables phone companies to route voice and data traffic over data networks and to incorporate ''value-added'' services such as call forwarding, credit card verification, and 800 calling. ''We can leapfrog the competition by several years,'' said Mory Ejabat, Ascend president and chief executive. ''We can now expand into new areas, become an Internet backbone provider and take our products across the country and into Europe.'' This story ran on page C01 of the Boston Globe on 08/04/98. c Copyright 1998 Globe Newspaper Company.

To: djane who wrote (51561)	8/4/1998 3:24:00 PM
From: djane	Respond to of 61433

Boston Globe. Acquisition a marriage of telecom convergence boston.com By Hiawatha Bray, Globe Staff, 08/04/98 Ascend Communications Inc.'s $843 million acquisition of Stratus Computer Inc. might be called a marriage of convergence. At first glance, the two companies seem to come from opposite sides of the track. Ascend makes computer data switches, while Stratus makes super-reliable computers for the telephone industry and others. But throughout the world, telephone networks and computer data networks are ceasing to be separate systems. Instead, they're converging into a powerful unified system that can transmit any kind of information quickly and cheaply. Phone companies and Internet service providers are spending billions to make it happen. Ascend could get a larger share of that market with Stratus in its stable. Stratus's key contribution to the partnership is its expertise in a little-known but vital communications network called Signaling System 7, or SS7. A telephone is actually a simple computer terminal. Dialing a number sends a set of commands to phone company computers, telling them how to handle the call. These commands used to be carried over the same wires that handle the calls themselves, but today, the commands are routed over a set of wires that only carries information about how to handle calls. That's what SS7 does. When you pick up a phone and dial a number, the telephone communicates with an SS7 computer that interprets the numbers you dial and figures out who you're calling. This information is sent over the SS7 network to a computer at the receiving end. These two SS7 computers send the correct commands to the telephone company's switches, and the call goes through. ''Telephone switches are getting dumber and dumber,'' said Annabel Dodd, a telecommunications consultant and adjunct professor at Northeastern University. ''The really complicated stuff is in the Signaling System 7 part of it.'' For instance, the SS7 computers collect the billing information on long-distance calls. They also run the popular ''value-added'' services that generate big profits for phone companies, such as voice mail and call-waiting service. Telephone companies demand extremely high reliability, which is why so many of them use Stratus computers to run their SS7 networks. Stratus makes machines that are ''fault-tolerant,'' or able to keep going even if a part fails. Each Stratus machine contains two of everything - processors, disk drives, and so on. Each computer is actually two computers. Both run constantly, doing the same tasks at the same times. If a part breaks, its mirror-image component never misses a beat, so the system never stops working. These days, most of the growth in telecommunications traffic comes from data transmissions, not voice calls. Traditional phone switches, designed for short conversations, are being flooded by Internet users who stay connected for hours at a time. Ascend is devising switching equipment that will pick out calls to Internet providers and route them over a different circuit, leaving the switch free for voice traffic. But new systems are allowing data networks to handle voice calls as well, by translating the sound into digital data. Major phone companies like the long-distance carrier Sprint have announced plans to set up unified networks that carry voice and data over the same lines, thus saving the huge expense of maintaining separate networks. Ascend makes the data relay switches that will be at the heart of such networks. With Stratus, it now has access to the SS7 equipment needed to provide high-quality phone service over advanced data networks. ''As the next generation network is built with more of a data backbone, the key will be to provide the same kinds of services that make the voice network so rich,'' said Stratus chief executive Bruce Sachs. This story ran on page C01 of the Boston Globe on 08/04/98. c Copyright 1998 Globe Newspaper Company.