Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Freeflight who wrote (11589)	5/20/1999 6:55:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 18016

********OT******** Herb on TheStreet: Why Takeover Noise at Cabletron Is at Deafening Levels By Herb Greenberg Senior Columnist >From the "new twist on old story" department: Forget the takeover talk at 3Com (COMS:Nasdaq). At least for now. Several analysts say (and/or hope) a more likely target is (or should be) Cabletron Systems (CS:NYSE). The New Hampshire-based company's CEO, Craig Benson, sparked the chatter (and lit a fire under his company's beaten-up stock) about three weeks ago at the Hambrecht & Quist Technology Conference in a speech dubbed "The Value Within." Before, during and after the speech he talked about the possibility of spinning off minority stakes in one or two units to the public. While that may not seem significant, it could also be viewed as a way of hanging a "for sale" sign on all or part of the company, or at the very least signaling to potential buyers that he's ready to deal. And don't overlook the importance "dealing" plays in this story. Potential buyers of Cabletron, which some analysts believe include Siemens, Alcatel (ALA:NYSE ADR) and Britain's GEC, would almost certainly want to sell off (or have the option of not taking) pieces that don't fit with their strategies. Each of these companies, through recent acquisitions, has shown a desire to grow much larger in the networking space. "Management has to be willing to make it as clean as a transaction for the buyer as possible," says Banc of America Securities analyst Al Tobia. That's not something 3Com has shown a willingness to do. But it's one reason Tobia last week upgraded Cabletron to buy from hold. "I think they're going to do something," he says. You can't help but take Tobia's upgrade seriously. He had a hold on Cabletron since 1996, and he was one of the first analysts publicly to voice concern about the company's old strategy of overstuffing the distribution channel. (Banc of America, formerly NationsBanc Montgomery, has done no recent underwriting for Cabletron.) He figures Cabletron, which rose 1 3/8 yesterday to close at 12 9/16, is worth $20 per share based on market valuations of comparable companies. Others think it could be considerably higher. It depends on what Benson really wants to do. As Cabletron's biggest investor, with 19 million shares, it would appear he would want to do something, and do it soon. "He wants some money, and I imagine he knows this is not an industry where longevity is a big benefit," Tobia says. "The writing is on the wall." However, Wall Street isn't yet convinced he will do the right thing. The stock has leapt around 35% since Benson spoke April 28. But it's still a far cry from its highs in the mid-40s in 1997. "People have taken a so-what attitude because [Cabletron is] losing the fight against Cisco (CSCO:Nasdaq) and Lucent (LU:NYSE)," says one skeptical money manager who's long Cabletron. He isn't convinced Benson is willing to part with the company. One thing is clear, though: The number of large, free-standing networking companies is shrinking, leaving fewer networking companies to buy. What's uncertain is whether Benson will know a seller's market when he sees it. Short Positions Lernahoulian alert: Lernout & Hauspie (LHSP:Nasdaq) yesterday reported first-quarter earnings that beat sharply reduced analyst estimates. But it shouldn't be surprising: Receivables, the amount owed by customers, rose to a record 112 days from 95 days in a business where receivables are generally low. High receivables suggest a company stuffs the distribution channel with more merchandise than it can reasonably digest as a way to boost quarterly sales and earnings. Another dollop of Delia's: When we last left it, Delia's (DLIA:Nasdaq) had fired its auditors and the company hadn't gotten back to me with an explanation. Today that explanation came: The company hadn't been happy with Deloitte & Touche and used Ernst & Young as the auditor for its iTurf (TURF:Nasdaq) unit, in preparation for its IPO. It was so happy with Ernst that it gave them the job of auditing the entire company. Iridiot or irresponsible?: Thanks to all who enjoyed this column's Iridiotic items on Iridium (IRID:Nasdaq). However, some readers agreed with Oscar Silva, who wrote: "As a journalist you should have learned by now that expressing your opinions can always generate emotional reactions, particularly when people lost money. Such reactions may be offensive or unfair to the author, as it could have been in this case against you, but that is no excuse for your insults. "You owe an apology to all the readers of TSC. I am taking the liberty to send this letter to your editors for them to judge." Be my guest. Investors who lost money with Iridium aren't Iridiots. Iridiots refers to Iridium investors who caused my Hostile React-O-Meter to spin outta control (outta control, I tell ya) for questioning the financials of Iridium before it fell like a, well, satellite out of the sky. **** Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at herb@thestreet.com. Greenberg also writes a monthly column for Fortune.