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Strategies & Market Trends : Position Trading Forum -- Ignore unavailable to you. Want to Upgrade?

To: Devil's Advocate who wrote (2719)	10/2/1998 2:30:00 PM
From: flyboy	Respond to of 7247

More on COMS @ LU.... By Dan Colarusso Senior Writer 10/2/98 1:21 PM ET Never before has Oct. 1 prompted the furious speculation bubbling in the network equipment sector as investors take aim at Lucent's (LU:NYSE) potential takeover targets. At the heart of the rumors is the possibility that either Ascend (ASND:Nasdaq) or 3Com (COMS:Nasdaq) will end up as Lucent's mate. One popular rumor that has Lucent buying 3Com, not Ascend, boosted 3Com shares and pressured Ascend's. Lucent representatives declined to comment; Ascend and 3Com officials could not be reached for comment. Options activity in each company is running counter to the overall weakness the sector, as call buyers play out-of-the-money options. In Ascend, the shares were down 2 3/16 to 39 3/8 at midday after being down more than 5 early. Ascend's October and November 40 calls were active, each trading more than 700 contracts against the downturn in the underlying shares. Traders were willing to pay about 3 3/8 ($337.50) for the October 40 calls and around 5 ($500) for the November 40 contracts. 3Com speculation has been as brisk, traders said. Options volume has been "slightly unusual" and the implied volatility -- the expected trading range of the shares -- had "exploded" over the past few sessions, according to Pacific Exchange trader Karim Tahawi. "The vols are up 20 points," Tahawi said. "It was very busy yesterday afternoon." He and other traders said trading patterns likely reflected the takeover rumors in the marketplace. As casualties mount overseas, the question is whether Europe and Asia are shopping more choosily or have slowed spending all around. Scientific-Atlanta (SFA:NYSE) only added to the confusion this morning by warning of poor quarterly sales in Asia, Latin America and Europe. Satellite and certain transmission products sold poorly, it said, and in Brazil the company encountered a delay in the issuance of cable licenses. In Europe, some customers put off deploying new systems. While Scientific-Atlanta's operations have little direct bearing on Cisco, Ascend or Lucent, its announcement today poured oil on the fire that was started late last month by warnings from Northern Telecom (NT:NYSE) and Alcatel (ALA:NYSE ADR). For its part, Lucent says today it's still comfortable with the range of analysts' estimates for the September quarter, even accounting for its exposure to foreign markets. Ascend's remote-access product division, which also is exposed internationally, is on track to meet its goals this quarter, according to one sell-side analyst. The stock is falling along with Cisco's because investors don't like pricey stocks in this ugly market, according to the analyst. Ascend could not be reached for comment. GOOD LUCK! C I A O