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Technology Stocks : Alcatel (ALA) and France -- Ignore unavailable to you. Want to Upgrade?

To: jas cooper who wrote (446)	3/2/1999 12:28:00 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 3891

Alcatel (SBF:CGEP) bid reflects Internet race lag ReutersPlus, Tuesday, March 02, 1999 at 12:02 By Neil Winton, Science and Technology Correspondent LONDON, March 2 (Reuters) - Alcatel of France's takeover of Xylan Corp (NASDAQ:XYLN) is the latest move by telephone equipment suppliers to make up lost ground in the race to provide the infrastructure for booming Internet traffic, experts said on Tuesday. More deals are expected with companies like Sweden's Ericsson AB (SWED:LME.B) and Siemens AG (FSE:SIEG) of Germany reportedly eyeing companies which make the equipment linking computers over the Internet, pumping electronic mail and digital data around the world. "This deal shows that convergence is finally happening, at least from the supplier side. The thing that focuses all the traditional voice companies - Alcatel, Nortel (Northern Telecom Ltd (TSE:NTL)), Ericsson (SWED:LME.B) is the Internet," said Colin Corrill, analyst at technology researcher Romtec. "They've come late to this game, but traditional voice vendors are deciding they must be in data. They've got pots of money so they can afford to make these buys," Corrill said. Alcatel said on Tuesday it agreed to buy Xylan of the U.S. for about $2 billion. Xylan makes high-bandwidth switching systems mainly for business customers' data traffic. Other recent deals in this field include Lucent Technologies Inc's (NYSE:LU) $18.5 billion takeover of Ascend Communications Inc, and Northern Telecom's acquisition of California-based Bay Networks. According to market researcher Datamonitor, traffic generated by data over the Internet is growing at around 1,000 percent a year and will accelerate past traditional telephone voice business in 2000. The expansion rate of the latter is under 10 percent. "This represents the move from the old world to the new with the convergence of voice and data," said Datamonitor analyst Wastif Khan. Khan said technology had been moving fast and this had forced big telecommuncations equipment makers to buy new core competencies. They did not have the time for their own research. Analysts said Ericsson and Siemens had yet to make big moves in this field, preferring to deal with partners rather than making takeovers. Chris Lewis, telecoms analyst at the Yankee Group, agreed that equipment makers had often been left behind by technical developments. Not all would seek acquisitions to remedy this. "Siemens has not been in the acquisition stakes and has decided to partner with equipment companies like 3Com (Corp (NASDAQ:COMS)) and Newbridge (Networks Corp (TSE:NNC))," said Lewis. But Datamonitor's Khan believed that companies that had declined the takeover route might still step in. Khan said companies like Dialogic Corp (NASDAQ:DLGC) and Juniper Group Inc (NASDAQ:JUNI) of the U.S. could be targets. In such a fast moving world it was possible to even imagine companies like Alcatel becoming takeover targets. "Ericsson and Siemens haven't made major purchases into the data IP (Internet protocol) world as yet, but they're certainly looking into it," Khan said. "There are rumours that Siemens might bid for Newbridge, 3Com might be too big. And Cisco Systems Inc (NASDAQ:CSCO), the world's leading Internet enabler, could even go ahead and buy a telco supplier like Alcatel. That would be a purchase in the other direction, just to look back into the old world if you like," Khan said. Copyright 1999, Reuters News Service