Dunnery Best, a senior vice-president of Midland Waldwyn Capital has got some positive things to say about Newbridge Networks in today's Globe and Mail. The article is entitled "Outlook favourable for two 'show-me' stocks." In it he goes over the reasons for Newbridge's recent sharp fall i.e. the earnings shocker, the fall in the TDM business. The last two paragraphs of his article bear mentioning and read as follows:
"Of course, Newbridge has a powerful, cutting-edge product line, the WAN (wide-area network) packet business, which includes the ATM (asynchronous transfer mode) switch - the choice of big carriers such as Britain's BT PLC and Washington-based MCI Communications. ATM is growing swiftly, but profit margins are less impressive than those in the TDM business.
Has Newbridge changed dramatically through all this? Arguably not. Instead, we've seen an accumulation of trends that were already in place. Newbridge has no debt, $300-million of cash on hand, high morale and a recently announced arrangement with 3Com Corp., which should assist both companies in competing against mighty Cisco Systems Inc., the 900-pound gorilla of the networking industry. The market has adopted a wait-and-see attitude. Now Newbridge needs to deliver revenue growth, and provide an idea of its next moves."
I tend to pay attention to what this fellow says, because I remember very clearly when Newbridge was in the high 30's (Canadian) and he wrote a detailed article explaining why it was time to buy and that he was urging his firm's clients to do so. Within a few weeks, Newbridge began a long and steady ascent.The firm has enough clout in Canadian markets that I do not dismiss the move as merely coincidence. |
