Ascend, Lucent deal has everyone talking

"Newbridge Networks looks very much like an acquisition candidate."

The take-over of Ascend Communications by Lucent Technologies made the most headlines in the IT world last week. I suspect that this move is likely to spark off some other groupings in the networking/communications fields over the coming weeks, with Newbridge Networks looking very much like an acquisition candidate. This will be an area to watch carefully, particularly on the local scene, with the different distribution channels that are involved.

• the deal between Datatec and General Electric Information Services (GEIS), whereby the former has secured the electronic trading rights and software licences to operate GE electronic-commerce services in Southern Africa.

[Local]

The first new Local Cautionary Notices this year (see attachment)

• the announcement that Groupe Bull is planning to cut between 1 000 and 2 000 jobs;
• the news that Northern Telecommunications is likely to shed 10% of its workforce; and
• AirTouch Communications has increased its stake in Omnitel Pronto Italia SpA, an Italian wireless company, despite being the target of a very large acquisition bid (see last week`s Bites), which finally resolved itself with UK`s Vodafone being the successful bidder. This resulted in the creation of the world`s largest and only global mobile phone operator, and concluded the largest cross-border deal ever done.

[International]

• HP launched its new low-end printer company, Apollo Consumer Products, which has been created to produce consumer-targeted printers for less than $100 and explicitly linked to low-end (sub-$700) PCs.

We saw excellent figures from Activision, AMD (but below expectations), American Nortel Comms, ATI Technologies, Cree Research, FI Group, Gresham Computing, Infosys Technologies, Rational Software and Yahoo! (way ahead of expectations).

Losses, however, came from Aura Systems, E*Trade Group, Forecross, Groupe Bull (half-year), Inktomi (but better numbers than expected), Network Equipment Technologies, NewCom, Seeq technology, Silicon Storage Technology, SoftNet Systems and Trident Microsystems.

Good numbers were recorded by Acclaim Entertainment, ADP, Apple (income well up and better than expected), Black Box, Intel (much better than expected), Microchip Technology, MIPS Technologies, Pace Micro Technology (well back in the black), Unisys (income well up), Rambus and Vega Group. Satisfactory results came from DSP Communications, Seagate (back in the black and better than expected) and Symantec (income down but revenue up, slightly better than expected).

Mediocre returns came from Dallas Semiconductor, Eastman Kodak, MicroAge, Motorola (revenue just up but income well down) and Taiwan Semiconductor.

Other financial news included profit warnings from Arrow Electronics, Identix, Interlink Computer Sciences, Isocor, JBA, Platinum Technology and Rambus. There was also the announcement that Silicon Graphics intends to sell-off the remainder of its shareholding in MIPS Technologies over the coming months.

Additionally, the shares of CalComp Technology were halted on Friday, pending details of the plans for final closure, and the shares of JD Edwards hit a 52-week low, although there has been no indication of any profit warning.

Locally

Compu-Clearing (+25%)
CS Holdings (+27.3%)
E-Data (+28.1%)
InfoWave (+38.9%)

Internationally

American Nortel Comms (+185.7%)
AMD (-20.1%)
Ascend (+20.6%)
Broadcom (-25.6%)
ENCAD (+23.7%)
IMSI (+28.9%)
Information Advantage (+56.5%)
LTX (+26.4%)
Madge (-21.7%)
Platinum Technology (-29.6%)
QAD (+27.6%)

The Microsoft trial continues to trundle along, but at least the prosecution has finished its case and the defence has begun its proceedings.