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To: Mighty Mizzou who wrote (9007)	1/12/1999 8:10:00 PM
From: Caxton Rhodes	Respond to of 18016

Lucent, Ascend boards mulling possible merger By Jessica Hall NEW YORK, Jan 12 (Reuters) - The boards of Lucent Technologies Inc. and Ascend Communications Inc. will meet Tuesday to consider a possible merger that would be valued at more than $16 billion, industry sourcessaid. Lucent, the world's largest maker of telecommunications equipment, and Ascend, the fourth-biggest maker of computer networking gear, declined to comment. A deal could be announced as early as Wednesday, but the timing could change depending on the outcome of Tuesday's meetings, industry sources said. Lucent could pay more than $80 a share in stock for Ascend, one industry analyst said. An acquisition of Ascend would follow Lucent's announcement on Monday it agreed to buy privately-held Kenan Systems Corp, a billing software company, for $1.4 billion. During a conference call on Monday to discuss the Kenan deal, Lucent's Chief Operating Officer Dan Stanzione declined to discuss a possible Ascend purchase, but said the data networking market is a "one of hot growing segments and one that we're interested in." Lucent and Ascend have been working closely together for months and this week were still conducting due-diligence reviews to evaluate a potential deal, said industry sources who declined to be identified. Sources said discussions intensified as Lucent's stock strengthened in recent weeks, recovering from a slump to $57 in October during broad weakness in the U.S. stock market. As Lucent's stock hit an all-time high of $119.94 last week, the company had a more powerful currency with which to pursue an Ascend acquisition, analysts said. Shares of Lucent fell $3 to $109.94 in Tuesday morning trading on the New York Stock Exchange, adding to losses seen Monday after investors feared a potential Ascend acquisition may dilute Lucent's earnings. Shares of Ascend fell 19 cents to $76.50 on Nasdaq, easing slightly after jumping more than $5 on Monday. Lucent, spun off from AT&T Corp. in 1996, has been widely expected to make a large acquisition since October, when it was freed from a two-year restriction that prevented it from pursuing acquisitions using the pooling-of-interests accountingmethod. Lucent plans to use pooling accounting for the Kenan acquisition, but that would not prevent it from using pooling in any future deals. If the long-rumored Lucent-Ascend deal comes to pass, it would help Lucent tackle the blending markets of traditional voice networks and high-speed data networks, analysts said. Lucent has made some small acquisitions in the data networking market, but an acquisition of Ascend would put it into a position to challenge networking leader Cisco Systems Inc., Ascend's chief rival, analysts said. "While Ascend has the technology, Lucent has the breadth and marketing experience and the cash to bring all of this technology global," said one Lucent executive, who declined tobe named. "Kenan and Ascend are these two opportunities for Lucent to fill in more of the holes it had and expand quickly," theexecutive said. (( Jessica Hall, New York newsroom 212-859-1729))