Newbridge Keeps Quiet About Takeover Talk
dailynews.yahoo.com
Thursday November 18 3:18 AM ETÿ
ÿNewbridge Keeps Quiet About Takeover Talk
ÿBy Susan Taylor
ÿOTTAWA (Reuters) - Amid growing takeover speculation, troubled Newbridge Networks Corp (NYSE:NN - news). refused to comment
ÿon Wednesday after Swedish telecoms equipment maker Ericsson said it is not opposed to making large acquisitions such as a takeover of
ÿNewbridge.
ÿOttawa-area telecoms equipment maker Newbridge has been seen as a takeover target since issuing its sixth earnings warning in 10
ÿquarters on November 2 and announcing the resignation of President Alan Lutz.
ÿNewbridge stock was subsequently battered by investors, but takeover rumors have helped it regain some ground.
ÿShares made minor gains on Wednesday, adding 60 Canadian cents to C$27.85 on the Toronto Stock Exchange and 1/16 to $18-15/16 on
ÿthe New York Stock Exchange.
ÿNewbridge has played down speculation that Ericsson and France-based telecoms group Alcatel Alsthom are interested in buying the
ÿcompany.
ÿ``If we find an acquisition target which is big, then we will of course present it to Ericsson's board,' President Kurt Hellstrom told Reuters
ÿon Wednesday.
ÿResponding to a question on what constitutes a large acquisition, Hellstrom said: ``If you're talking about Newbridge, then that would be a
ÿlarge acquisition, while ACC was a smaller acquisition.'
ÿEricsson bought California-based Advanced Computer Communications (ACC) from Newbridge in 1998 for $285 million.
ÿThe world's third-largest maker of mobile phones and the biggest producer of mobile systems, Ericsson has until now followed a strategy
ÿof buying small- and medium-sized firms.
ÿ``Ericsson may simply be leaving the door open and may have somebody else in mind, (and) they may have nobody in mind,' said Rob
ÿMacLellan, an analyst at CT Securities in Toronto. ``I wouldn't read too much into it.'
ÿNewbridge has denied media reports that its board was told it would review takeover bids when it met on Wednesday and Thursday.
ÿDirectors are considering an action plan, on which work began in late August, to address sales problems.
ÿThat plan will be discussed with 3,300 Ottawa-area staff at the nearby Corel Center hockey arena on Thursday afternoon. Newbridge said
ÿit holds staff updates with the release of quarterly results.
ÿ``I can categorically state it (the plan) wasn't in response to our perception of a slowdown in ATM revenue,' Newbridge spokesman John
ÿLawlor told Reuters.
ÿNewbridge, which warned it expects a profit of 8 to 10 cents per share versus analyst expectations of 20 cents per share, releases its
ÿresults in a conference call late on Thursday.
ÿSlowing sales for the firm's Asynchronous Transfer Mode (ATM) technology, which zips multimedia data around networks at high speeds,
ÿwas largely to blame.
ÿ``You would expect that the results will be pretty well in line with the pre-announcement of November 2,' Lawlor said. 'Probably less time
ÿwill be spent on the results and probably more time on the strategic actions.'
ÿAnalysts may also want further details on the departure of Brian Jervis, the head of the switching product group. Ed Ogonek, who joined
ÿNewbridge in August from Alcatel, has replaced Jervis on an interim basis.
ÿAlthough analysts are keen to hear details of the repair plan, several suggest the outlook will not be positive.
ÿ``My gut feel is that guidance on the 18th is going to entail much more modest ATM growth (and) higher overhead spending because of the
ÿrecent acquisitions,' said MacLellan.
ÿ``I don't think the street is going to like, a whole lot, what they hear Thursday night. And that is going to translate probably into weakness on
ÿFriday -- takeover speculation aside.'
ÿNewbridge said it expects sales to pick up steam with its new high-speed switch, scheduled for release for lab trials in upcoming weeks,
ÿand its broadband gear.
ÿ``Do we believe that the sales slowdown will correct itself?...yes we do,' Lawlor told Reuters. ``Every sign indicates that...sales in the
ÿU.S. market, as well as elsewhere, but in the U.S. market to begin accelerating again.'
ÿMeanwhile, after a three-week trial on Lucent Technologies Inc (NYSE:LU - news).'s allegations that Newbridge's ATM products infringe
ÿfive Lucent patents for data networking systems used in Internet communications, a federal jury began deliberations in Delaware on
ÿWednesday.
ÿ($1-$1.47 Canadian)ÿ
ÿEarlier Stories
ÿÿÿÿ Newbridge Quiet on Ericsson's Takeover Comments (November 17)ÿ |
