Compaq has approached other companies as it seeks to establish its position as the number two networking company this decade. Bay Networks, Madge Networks and Cascade have all been involved in talks, according to sources.
But the likelihood of IBM heading them off at the pass will appear tomorrow when IBM, 3Com and Cascade agree on an Internet Protocol (IP) standard which is aimed at cutting out the opposition from Cisco and Bay Networks. That coincided with the news that Compaq was casting around to buy a weak networking company and had approached Bay Networks and Digital over the past two weeks in the hope of a takeover.
Cisco is allied with Microsoft on switching and hub technology and IBM and 3Com were in talks seven months ago over a takeover. Now Big Blue has taken its own angle on the switching spin by allying with troubled Cascade to introduce IP switching which the three companies claim is faster by a factor than five. Cascade was tipped by Wall Street analysts for takeover last week but its shares slumped Friday by $24 each, according to a source at Bay Networks.
Meanwhile, IBM?s deal with 3Com and Cascade represents an inability by Big Blue to find the money to take over 3Com after the deal foundered at the end of last year. The Bay Networks source said: ?3Com and Cascade and IBM are tied together anyway. From our point of view it doesn?t matter because we?re all members of the Network Interoperability Association (NIA).?
He said Compaq was still on the look out for companies to buy. ?At the moment, everyone?s in bed with everyone else. The whole industry is in turmoil.? Compaq had approached Bay to talk about acquisitions last week but he thought that was very unlikely.
He was surprised that Cisco had just signed a deal with Sybase. ?Bay Networks is in bed with Novell and Microsoft,? he claimed. But Microsoft is edging closer to Cisco, according to other sources, in a bid to head off IBM and 3Com.
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