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

To: Tim Luke who wrote (58749)	1/12/1999 5:48:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 61433

Telcos talk takeover rumours Lucent merger could pressure hi-tech firms By SUSAN TAYLOR, Ottawa Sun NETWORK giants Nortel and Newbridge may be in for a rocky ride if Lucent Technologies Inc.'s rumoured $16-billion US takeover of Ascend Communications Inc. goes ahead. A deal likely spells increased speculation of a Newbridge takeover and means a more powerful competitor for both Newbridge and Nortel. Lucent could announce the Ascend purchase as early as Wednesday, the Financial Times of London reported. USA Today also reported the rumoured acquisition yesterday. That deal -- another sign of consolidation in the network sector -- would parallel Nortel's $9.1-billion bid for Bay last year. Lucent, a leader in traditional phone networks, would be combined with Ascend, which sells Internet and computer networking gear. "Put the two together and you have that much more formidable a competitor," said Paul Silverstein, a senior communications analyst with BancBoston Robertson Stephens. The deal would put additional pressure on competing firms, such as Ericsson, Alcatel and Siemens, to bolster their data arsenal with an acquisition. "There's a finite number of dance partners out there and one of them just got married," said Duncan Stewart, a Tera Capital Corp. partner who manages the Navigator Canadian Technology Fund. "The obvious response is to go out and buy the next best thing," said Silverstein. "There's only one company of really any substance ... Newbridge." Both Ascend and Newbridge sell Asynchronous Transfer Mode equipment, or ATM, that chops up digital data; whether it's voice, computer data, or video; into matching bits and then sends them over networks at high speeds. Newbridge's stock rose yesterday, up 70cents on the TSE to close at $49.75 and 81cents in New York to end at $33.25 The market viewed the deal's impact on Nortel nervously. The stock fell $2.10 on the TSE to close at $82.15 and $1.19 to $54.25 in New York. "It won't have a huge effect on Northern Telecom right off the bat, but long-term it's obviously going to be competition for them," said Phil Stafford, head trader at TD Asset Management Inc. The takeover should be taken with a grain of salt, said one analyst. "It's a rumour," said Gurinder Parhar, with HSBC James Capel Canada Inc. "These rumours have been around since July of last year." But he admits the deal does fit with the sector's move towards consolidation and adds to Newbridge's appeal as a takeover target. Since its spinoff from AT&T Corp. two years ago Lucent has spent more than $4 billion on 17 acquisitions to fill out its product line. Yesterday it paid $1.48 billion in stock to buy Kenan Systems, which makes software that phone companies use to send one bill combining traditional calls with wireless, cable TV and other services.