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

To: Mighty Mizzou who wrote (56312)	10/21/1998 12:20:00 PM
From: H.A.M.	Respond to of 61433

New deal is in the works for Stratus By Todd Wallack/Boston Herald October 21, 1998 Stratus Computer Inc. may rise again. Even though Ascend Communications Corp. bought the Marlboro computer maker for $822 million this week, Ascend plans to sell the bulk of the business back to Stratus managers who hope to run it as a stand-alone company under the Stratus name. The catch: Stratus employees don't have enough cash to buy the business outright, so they need to borrow most of it. Bruce Sachs, Stratus' former chief executive and now an Ascend executive, said the company hired Salomon Smith Barney to help find potential backers. Salomon, Sachs said, has already lined up meetings with at least a half a dozen financiers who specialize in leveraged buyouts - deals involving a high amount of debt. He said a deal should be signed by year-end and completed early next year. Stephen Kiely, who is now running the business, would likely lead the new team. Most details must still be worked out, such as whether employees will pitch in any money and how much stock they will own. Ascend also wants to retain a minority stake in the firm; for tax reasons, Sachs said it will be less than 20 percent, and probably about 10 percent. The new operation should have enough cash flow to handle the debt, which would be under $100 million, Sachs said. The business would have revenue of about $300 million a year and nearly 1,000 workers. After a few years, Stratus could even go public again. ''I think the concept of the (leveraged buyout) is very attractive for the employees,'' Sachs said. But Steven Galante, publisher of The Private Equity Analyst newsletter in Wellesley, said high-tech leveraged buyouts are rare because fortunes can change so fast in the computer industry. ''The key to making them work . . . is a reasonably steady cash flow so you can pay off the debt,'' Galante said. Steve Josselyn, an analyst with International Data Corp. in Framingham, wasn't certain about the prospects of a scaled-down Stratus. Stratus has a ''fairly good and loyal customer base,'' but will face increased competition from traditional computer makers building more crash-resistant machines. Ascend, a California data networking firm, still plans to keep the telecommunications side of Stratus' business. Stratus makes computers designed to run around the clock for everyone from banks to phone companies. Ascend also plans to find outside buyers for two software units, in Dallas and New York, which employ about 325 people. As the Herald reported yesterday, Ascend plans to cut fewer jobs than previously announced. It provided additional details yesterday. The company plans to shift 200 manufacturing workers in Ireland to an outside contractor and give pink slips to between 200 and 250 Stratus workers worldwide, while cutting another 100 jobs through attrition. After the deals are completed, Sachs estimated Ascend will employ about 1,100 Bay State workers.

To: Mighty Mizzou who wrote (56312)	10/21/1998 12:24:00 PM
From: gbh	Read Replies (2) \| Respond to of 61433

Puts against my shares. I assume way out of the money? Good hedging strategy for someone who doesn't want to give up the shares (ie, pay taxes, still likes upside, etc). Put don't expect those puts to pay off unless the market tanks again. Could happen, but I think the bottom has been put in, and any market selloff from here might take us to 7800-8000, not 7400 again. Remember, Big Al is on our side now. Two more cuts to come before the end of the year. The "buy the dips" mentality is back in vogue, and the "sell the rally" crowd is in hiding. :) Gary