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It looks as if struggling fault-tolerant systems vendor Stratus Communications Inc is about to lose its independence. Rumors that Ascend Communications Inc was interested in acquring the company were nailed down on Friday by the San Jose Mercury. The paper claimed to have found confirmation that a deal, worth around $800m in stock, was due to be announced early this week. Reuters separately reported that negotiations could be finalized over the weekend and announced by today (Monday), although nothing’s been signed yet and things could still fall apart. Stocks in Stratus, which only recently announced a $20m restructuring deal and 400 jobs losses following a poor second quarter (CI No 3,460), rose strongly on the news. Ascend’s stock, riding high due to its recent strong quarter and because of further rumors that Lucent Technologies Inc might step in and acquire the company, fell $7.03 to $44.47 at close of market on Friday. Ascend’s interest in Stratus is due to the dominant market share the company still has in the telecommunications industry. Stratus systems could help Ascend bridge the gap between circuit-switched voice networks and the data switching equipment central to Ascend’s business. All the major carriers are currently in the process of integrating voice and data networking in order to support internet services. Stratus also has crucial SS7 System Signalling 7 call control channel protocol software, used by public switched telecommunications systems worldwide, for call routing on the new networks. Marlboro, Massachusetts-based Stratus is even situated near Ascend’s Westford, Massachusetts division, the one it acquired with last year’s $3.6bn Cascade Communications Corp acquisition. Earlier this month, Ascend was said to be ready to make a bid for Petaluma, California-based telecommunications equipment maker Advanced Fibre Communications Inc, although the rumors were strongly denied by Ascend CEO Mory Ejabat. Last week Ascend’s rival, Cisco Systems Inc, acquired Summa Four Inc in a stock swap valued deal worth approximately $116m. It intends to use Summa’s switching technology to offer value-added voice services over its existing voice-over-IP infrastructure.

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CBR Staff Writer

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