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Ascend-Shiva buzz won't die down

More rumors swirl about a possible merger between Ascend Communications and Shiva, sending Shiva stock soaring.

Ascend Communications (ASND) and Shiva (SHVA) are getting proficient at playing cat and mouse.

Ascend has long been reported to be interested in acquiring Shiva for, among other reasons, complementary sets of technology. Yesterday, another groundswell of acquisition rumors swirled on Wall Street, causing Shiva's stock to jump over five points to close at nearly 54 points in heavy trading. Shiva's stock was down three points today in another day of high-volume trades.

Shiva has historically focused on the low end of the remote access market, offering point-to-point connection solutions for individual remote users and workgroup remote connectivity hardware and software. Ascend, on the other hand, has taken its strident engineering focus into the Internet age with reckless abandon, targeting large corporations with remote users and Internet service providers (ISPs) for high-cost, heavy-duty remote switching hardware and accompanying software.

"All things being equal, the logical move from a competitive standpoint is for Shiva and Ascend to get together," said one industry analyst, who requested anonymity. "Between the two of them, they have a really good range of products."

Both companies showed healthy growth in third-quarter earnings, though Ascend, buoyed by a huge boom period in high-end networking, experienced an astronomical 278 percent revenue increase for the quarter over the previous year. Shiva reported $6 million in income for the quarter; Ascend had a $25 million profit.

Shiva has come under increasing product pressure from the big four billion-dollar networking monoliths, Cisco Systems, Bay Networks, 3Com, and Cabletron Systems, as well as telecommunications companies in the low end of the market, leading some to believe it is time to sell the company so that it can continue to thrive.

There were rumors this past summer that Cabletron was interested in acquiring Ascend to shore up its remote access product line, but those rumors have dissipated with the turning of the leaves.

Ascend has also been linked to acquisition-minded 3Com and Fore Systems, as the networking market continues to undergo rapid change.

No matter who the players are, one issue regarding the merger remains: the possibility of a clash of corporate cultures. Shiva is based in Bedford, Massachusetts, while Ascend makes its home in Alameda, California. Beleaguered Bay Networks, the result of an East Coast-West Coast merger, is a prime example of such a clash.

Ascend refused to comment on the merger rumors. Shiva representatives could not be reached for comment.