Abstracts » Business, general

Ascend deal puts firm on heels of Cisco; Cascade purchase expected to heat up rivalry; investors see the risks

Article Abstract:

Ascend Communications' planned acquisition of Cascade Communications will put it in direct competition with networking industry leader Cisco Systems, and falling stock prices for both companies reflect investor scepticism. Ascend's stocks fell 22%, reducing the value of the deal from $3.7 billion to $2.9 billion. Cascade's shares fell 7%, although Cascade reported that revenues were expected to be at least 25% short of projections due to adverse results for 1st qtr 1997. 3Com's planned $6 billion acquisition of US Robotics met with a similar stock market response; 3Com's stock fell over 10%. Ascend is known for its remote access equipment and router products, while Cascade produces network switches. Doubts have been expressed about the ability of the two to successfully complete a cross-country merger. The combined company will have a comprehensive range of networking products, including Cascade's Internet Protocol switching technology, which bypasses proprietary corporate networks, threatening Cisco's router business.

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Ascend Communications to buy Cascade for stock valued at about $3.7 billion; deal is latest development in consolidation frenzy for networking gear

Article Abstract:

Ascend Communications will acquire Cascade Communications for approximately $3.7 billion, following 3Com's Feb 1997 acquisition of US Robotics. Networking companies are under increasing pressure to consolidate in order to broaden their product lines for corporate customers seeking to upgrade or implement extensive computer networks. The merger frenzy was ignited by market-dominating Cisco Systems, which acquired Stratacom for $4 billion in 1996. Ascend will trade .70 share for each of Cascade's, which have dropped 57% since Jan 1997. Networking stocks have plummeted recently, reflecting investor concerns over the industry's continued growth. Demand for equipment is strong, but the market is extremely competitive, with rapid technological advances. Ascend leads the field in remote-access technology, while Cascade provides equipment for advanced switching capabilities such as ATM and frame relay. The combined company will offer end-to-end solutions for Internet service providers.

Company analysis

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Nextel to sell 2,000 wireless towers for $560 million

Article Abstract:

Outsourcing non-core aspects of business is becoming more the norm as demonstrated by Nextel Communications selling 2,000 towers to SpectraSite Communications for $560 million. SpectraSite will charge Nextel a monthly rental fee for space on the towers and can rent out space to other wireless carriers as well. The agreement between the two firms includes SpectraSite's buying another 1,700 towers for Nextel's use over the next five years.

Comment:

Company sold 2,000 towers to SpectraSite Communications

United States, Asset sales & divestitures, Acquisitions & mergers, Abstract, Nextel Communications Inc., NXTL, SpectraSite Communications

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