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Technology Stocks : FORE Inc. -- Ignore unavailable to you. Want to Upgrade?

To: jach who wrote (9075)	8/26/1998 10:11:00 PM
From: Ed Frye	Read Replies (2) \| Respond to of 12559

Just found this. ed Reuters Online Wednesday, August 26, 1998 6:36PM Duncan Martell PALO ALTO, Calif. (Reuters) via NewsEdge Corporation - Fore Systems Inc. stock fell sharply Wednesday on fears the planned $250 million purchase of closely-held Berkeley Networks by the No. 7 maker of computer networking equipment would hurt earnings. The stock fell 5 3/8 to close at 18 7/8 on Nasdaq, where it was the second most-active issue with 16 million shares traded. Earlier in the day it was down 6 1/2. Fore, which had long been considered a takeover target by larger networking companies and telecommunications equipment companies, said Tuesday it would buy Berkeley Networks to add equipment that speeds connections between computers using Microsoft Corp.'s NT operating system. ''Berkeley doesn't have any revenue and they've just started to ship their first product,'' said Martin Pyykkonen, networking analyst at CIBC Oppenheimer, who rates Fore a ''hold.'' ''Will the market really buy this product? Part of the message here is even if a start-up has great technology, it's hard to build up a sales force,'' he said. Pyykkonen said he expected Berkeley to add about $60 million in revenue and 4 cents a share to earnings in Fore's next fiscal year ending in March 2000. Bruce Haney, chief financial officer for Pittsburgh-based Fore, said in an interview late Tuesday that the purchase would shave fiscal 1999 earnings by about $5 million, or 4 cents to 6 cents a share. Haney said the purchase of Milpitas, Calif.-based Berkeley Networks would start adding to earnings in the 2000 fiscal year starting in April. Fore also said it would take a charge of $190 million to $230 million, or $1.80 to $2.20 a share, for in-process research and development. The purchase gives Fore a leg up in targeting small- and medium-sized businesses, which often use the Windows NT operating system to help run their computer networks, Ron McKenzie, head of strategic marketing for Fore, said. Some analysts also expressed fears that investors might be concerned by Fore's track record in buying companies. ''Fore's history with acquisitions is not particularly smooth,'' Al Tobia, networking analyst at NationsBanc Montgomery Securities wrote in a research note to clients. ''Consequently, we believe that investors are not likely to give Fore the benefit of the doubt on this one.'' Tobia also said that Fore's sales of its new ASX-400 switch used in so-called asynchronous transfer mode, or ATM, networks were strong. He added that business in Europe, as well as North America has been strong, paced by sales to its federal government business.