05/12/97 TAKEOVER BAIT: THE INTERNET'S GRANDDADDY

TAKEOVER BAIT: THE INTERNET'S GRANDDADDY

WALL STREET IS BUZZING about big fish circling BBN. Shares of BBN, which built the Internet's predecessor, have risen 45% since Apr. 24. And the company itself fueled the rumors on Apr. 28 by delaying quarterly results for nine days. That leaves many to assume big news is coming.
AT&T, which has a small stake in BBN, tops the Street's suitors list. It already buys BBN's Internet access and network security services. But sources close to BBN--which isn't talking publicly--say that's wrong, and AT&T won't comment. Other names include IBM and GTE. They're mum, too. Each could make ample use of BBN's Planet Div., which furnishes Net connections and data network services to 3,200 clients, including Intel and Fidelity. Almost half of Planet's revenues comes from helping fix America Online's busy-signal problem, a real windfall.
While BBN has said that it won't sell Planet separately, some analysts think the company's slower-growing contract research business is a hard swallow for acquirers. Another minus: BBN's vast capital spending has helped produce losses for three of the past four years. Analysts expect a $13 million third-quarter loss.
Paul C. Judge