Dow Jones Newswires -- January 8, 1998
Newbridge Down Sharply; Analyst Cuts Earnings Forecast
By Ben Dummett
TORONTO (Dow Jones)--Newbridge Networks Corp.'s (NN) stock is down sharply
Thursday, after TD Securities Inc. technology analyst David Beck cut his fiscal 1998
earnings projection for Newbridge.
In addition, on Wednesday market rumors began circulating that Kanata, Ont.-based
Newbridge was guiding analysts to sharply reduce their earnings projections for the
current fiscal year ending April 30 and for fiscal 1999. These rumors have also hurt the
stock, said Rob MacLellan, technology analyst at SBC Warburg Dillon Read.
But "the rumors are categorically untrue," said MacLellan, who talked with Newbridge
officials Wednesday night and Thursday morning. MacLellan said he plans to issue a
research note later Thursday to help dispel the rumors and to reiterate his "buy"
recommendation on the stock.
A Newbridge spokesman said the rumors are "untrue.
MacLellan said Beck's decision to "fine tune" his earnings projections compounded
concerns fueled by the market rumors.
Beck wasn't immediately available for comment. In his reseach note published earlier
Thursday, Beck said he still rates Newbridge a "buy," despite reducing earnings estimates
for the company.
In the note, Beck cut his profit estimate for Newbridge's fiscal 1998 to C$1.49 a share
from the previous estimate of C$1.54 a share, after reducing his fiscal 1998 sales
projection for Newbridge's time division multiplexer, or TDM, business to C$776 million
from C$805 million. A review of pessimistic market growth forecasts for TDM sales
prompted the reduction in the sales estimate, Beck said in the note. For the same reason,
Beck cut his TDM sales estimate for fiscal 1999 to C$783 million from the previous
estimate of C$873 million. |
