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

To: Mark Duper who wrote (3484)	11/21/1998 12:42:00 AM
From: Gary Korn	Read Replies (1) \| Respond to of 4135

11/20/98 Exchange Telecommunications Newsl. (Pg. Unavail. Online) 1998 WL 9833408 See Bold Exchange Telecommunications Newsletter Copyright(C) 1998 EXCHANGE TELECOMMUNICATIONS NEWSLETTER Friday, November 20, 1998 AUSTRALIA: DAVNET PARTNERS WITH MICROSOFT TO DELIVER REAL TIME VIDEO Newly-licenced and soon-to-be-floated carrier, Davnet (Exc 10/35, p4), is planning to deliver real-time video and other bandwidth- intensive content over the broadband, local access IP network it is rolling out in major CBD buildings. The company has formed an alliance with Microsoft Media Technologies, a business unit of Microsoft based in Seattle to offer Microsoft's Media Player Net Show to its customers and is also discussing the use of its network by Microsoft to deliver software products to end users. Davnet is installing a network based on Xylan routers and currently has six CBD buildings cabled, three in Sydney and three in Melbourne, with 50 customers, according to director of operations, Bill Liao. Liao described Net Show as a technology which packetises broadcast quality video into a 384 kbits/sec data stream and delivers it in real- time over an IP network using IP multicast technology. Initially the service will not offer video content on-demand, but Liao said user selectable start times for delivery of video content would be available later. "Bandwidth will not be a problem because we a have at least 10 Mbits/sec into each building," he said. Davnet also intends to use the technology to deliver high value financial information services. Liao said it had already signed agreements with Reuters and Bloomberg and one with Bridge was "very close". It also expects to be able to rebroadcast CNN which is a free-to-air service. Davnet has developed its billing system using Microsoft's Access database product. It is developing plug-ins for Internet Explorer 4 to enable users to access their billing information and usage data and will be promoting the use of Internet Explorer to its clients. Davnet also expects to offer high quality voice over IP services using technology developed by Xylan for use on its Xylan switches and a low cost IP to fax service which will cost users about 19 cents per fax in Australia and 30 cents per page for overseas faxes, Liao said. Liao said that Microsoft was moving to an online distribution system for its software products and upgrades and was looking at using the Davnet network to deliver these to connected customers. He said that the network could deliver a very large software package such as the Windows NT upgrade Service Pack 4 in 30 minutes. Telstra Big Pond and Microsoft announced earlier this year a plan under which Microsoft would use Telstra's Big Pond cable service to deliver software updates to developers in a more timely fashion than the quarterly CD rom format. However Telstra's cable network serves primarily residential, not commercial areas (Exc 10/21, p4). Buildings currently connected to the Davnet network are: in Sydney; St Martins Tower, Grosvenor Place and the AMP Centre: in Melbourne; The Rialto, 101 Collins Street and 434 St Kilda Road. Liao said a 10-year agreement had been signed with the owners of Sydney's Chifley Tower. "the most expensive office space in Australia" and this would be cabled very soon. According to the company's Website, its "mission is to become the largest supplier of Internet and data communications connections for tenants of premium central business district buildings through the use of innovative and appropriate aggregation technologies. We will do this by providing these customers with more bandwidth at consistently lower costs... Not having a carrier licence now poses... a commercial hindrance in developing and expanding (our) business and services." Davnet is planning a backdoor listing on the ASX via Golden Hills Mining on 23 December. ---- INDEX REFERENCES ---- KEY WORDS: SUBJECT: COSTS; COSTS AND PRICES; TECHNOLOGICAL DEVELOPMENTS; NEW PRODUCTS AND SERVICES; PRODUCTION; LICENSING; COUNTRY: AU AUSTRALIA; AUSTRALIA VICTORIA; CHINA; ASIA SIC: 161; 5735; 3652; 737; 7375; 357; 7372; 1622; 484; 4833; 7622; 16; 57; 573; 36; 365; 73; 35; 162; 48; 483; 76; 762

To: Mark Duper who wrote (3484)	11/24/1998 8:01:00 PM
From: Bret Masterson	Read Replies (1) \| Respond to of 4135

Mark, A couple of other important considerations between pooling/purchase acquisitions: (1) Typically acquisitions are made a much higher price than the book value of the company. Under a purchase transaction, the difference between the book value and the purchase is considered "goodwill", and typically must be amortized over the next 15 - 30 years, which has the effect of reducing earnings per share. Under a pooling transaction, the asset and liabilities of the companies are simply combined, and there is no "goodwill" established. Companies almost always prefer pooling transactions if possible, to avoid diluting future reported earnings. (2) Getting SEC approval to account for a transaction as a "pooling" transaction usually requires that a company is restricted from certain types of transactions, which is why there was all the talk before about when Lucent's restrictions would expire. (3) Gary's comments were correct in terms of the how to account for sales and earnings attributable to the acquisition in the year the acquisition was made, but previous to when the purchase took place (e.g. how do you treat sales made in Q1 and Q2 for a company which was acquired in Q3). In subsequent years, sales from the acquired company will included exactly the same irrespective of which method was used. The only difference will be that the company acquired under the purchase method will have lower reported earnings due to the amortization expense.