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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Fine who wrote (589)	8/7/1998 1:21:00 PM
From: Kenneth E. Phillipps	Respond to of 14638

Copied from the Yahoo Messages Board Survey shows approval of NT and BAY merger DoctorRVB Aug 7 1998 12:58PM EDT From Merrill Lynch (08/06/98) This is the fourth in a series of surveys of 50 MIS managers. The purpose of the survey is to identify industry trends and gain insight from purchasers of data networking equipment. This report presents the results of our survey that was conducted during July 1998. Fundamental Highlights: ú The growth in I/T budgets appears to be accelerating. About 77% of respondents who said their 1998 budget would be up said that the growth rate would be faster than 1997, while only 3% indicated the growth rate would be slower. ú MIS managers surveyed have a high degree of confidence in becoming Y2K compliant by December 1999. About 80% of respondents indicated that they expect to be Y2K compliant (including testing) by June 1999, and 96% expect to be compliant by December 1999. ú The survey indicates that there is a low risk that Y2K spending will negatively impact spending on data networking equipment. None of the survey respondents indicated that Y2K would displace spending on data networking equipment. Investment Highlights: ú As expected, Cisco was named as the data networking vendor of choice by a 2-to-1 margin over its closest competitor. ú Survey respondents who use more than one brand of server OS prefer using Novell's Netware on their network servers because of its price, stability and reliability. ú The survey indicates that LAN switches (100 Mbps), high end routers, and remote access devices are the most highly price elastic data networking equipment. In the intermediate term, we expect continued price competition in the LAN switch segment, and some cannibalization in the high end/mid-range router segment by lower priced Layer 3 switches. We estimate that Bay Networks and 3Com have about 38% and 26% of the emerging Layer 3 switch market, respectively, and believe they are well positioned to continue to benefit from high growth in this market. Industry Consolidation Do you view Nortel's acquisition of Bay Networks as a net positive or negative as a purchaser/user of data networking equipment? Positive 66% Negative 6 Neutral 28 Survey respondents approved of the Nortel/Bay Networks announcement, and are looking forward to integrated Nortel/Bay products, especially in the telephony arena. However, most respondents said they would prefer no more consolidation because they believe it would hurt competition. We expect to see more consolidation and partnerships between data networking companies and traditional telecom equipment providers. We believe Ascend and 3Com are two companies who would be attractive acquisition candidates for large telecom equipment vendors. Personal Investment If you could only purchase one stock, which data networking company stock would you buy now, and why? 1. Cisco 2. Novell 3. Microsoft 4. Bay Networks/Nortel Cisco was mentioned most often by a 3-to-1 margin over its closest competitor because of its market share and products. Novell was cited for having good products that were easy to use. Survey respondents liked Microsoft because it is an industry leader, and Nortel and Bay Networks because of the merger.

To: Paul Fine who wrote (589)	8/7/1998 1:31:00 PM
From: SuperBacon	Read Replies (1) \| Respond to of 14638

Bay/NT failing to rally last few days Paul, In your comment, you said that you were disappointed since Bay/NT failed to rally the last few days. Just remember that they did not fall like most other tech stocks over the last few weeks (with the exception of one day). The others simply rallied the last few days, because they have taken a huge hit over the last few weeks. I actually thought NT stock was doing very well during the recent market slump. SB

To: Paul Fine who wrote (589)	8/9/1998 12:51:00 PM
From: Cruiser	Read Replies (1) \| Respond to of 14638

Hello all ... it's been a while since I stuck my two cents into SI ... hello Paul, good to see you here. I have a few comments (as usual) and a perspective on the merger progress. I lived through the SNPX/WFLT merger and beleive me I am watching carefully for signs of the same NIH (Not-Invented-Here) attitudes with the BAY/NT deal. I stay pretty tuned into the merger activities and talk to many people in the know here. I certainly have my trigger on the button in case I see this thing coming apart. I have been through too much over the last several years to go through it all again. There are factions with-in BAY that are certainly skeptical about the merger, but overwhelmingly the word internally is highly positive. (not too surprising since we work here :-) ... but I am not getting the picture that people are going to bail from BAY anytime soon. Most people want to give this thir best shot and see how things are in 12-18 months. The first part of the merger will be with the Enterprise Data Networks group. This is the division that has those ads woth the coffee shop, newsstand, and barber shop. I think they are great ads. These guys have built a huge business (1 billion) in a very short amount of time. We will be teaming up with them to attack the first part of the integration story. On the stock price, this was the source of the most whining that I heard internally. I wish these guys (you know who you are) would grow up ... the stock price of BAY at $38 /share is MEANINGLESS. Unless of course you are waiting to bail out at the first possible moment, iun which case please leave now. (I am talking about BAY Employees not shareholders).. most of the whining died down fairly quickly after understanding the incredible possiblilities with NT/BAY ... granted we can certainly screw this up if we aren't on top of it. Mostly though, there isnt much of a chance that NT and Bay will act like SNPX/WFLT. That was a completely different type of merger. Although the merger in my opinion was the right thing to do, we lacked clear leadership at the top between the coasts so we were allowed to fight internally for too long. This seems less likely with NT given their size and given the willingness that I have seen with the EDN folks to have Bay help them get the technology they need even faster. (I welcome any EDN employees to comment directly on that point) ... My crystal ball says that we are going to see a slightly improved stock price up to the merger .. I would not be surprised to see BAY back at the offering price by close of transaction. After that I think we will see a speculative run based on all of the positive presentations that BAY and NT will be making to the analyst community. That could easily propel NT back to their all-time high of $69... then earnings will start to matter more and the synergies will need to start becoming evident. For the record, I am more convinced now that Bay Networks equipment will be playing a significant role in the networks of major corporations for the next 20 years.... and I cannot say that for CS nor COMS ... let alone the other bit players. The unfortunately elusive $100 Bay Stock that was the mantra of Bay employees will continue now as the $166 NT stock. I am utterly convinced that this will happen. The only thing that I cant know, is the when. Which of course is the only thing that matters when you are an investor. For your info, my time frame is under 5 years. (sorry daytraders) House has secured a significant place for Bay networks in the Data Networking / Telecommunications business. Ne deserves incredible kudos for that... after all, we are the Rodney Dangerfields of networking and frankly I am getting pretty tired of it. Thank you Dave House for bringing the recognition to Bay that we deserve! So I'll be monitoring this thread as the "Bay Under house" thread has served its purpose. I encourage the Bay gang to jump on the NT bandwagon with the rest of us and join this thread! Cruiser