Just joined the board. Thought this may be of interest to all of you. It is from a talk given by TM to RBC DS this past week.
Jul 08/98
NEWBRIDGE NETWORKS - UPBEAT PRESENTATION FROM THE CHAIRMAN AND
LOTS OF OPPORTUNITIES, BUT BETTER PR NEEDED
If last night's talk by Newbridge CEO Mr Terry Matthews at RBC DS
Montreal could be summarised, the summary would revolve around
the two themes of (1) lots of opportunities being present and (2)
a much more vigorous public relations effort with customers being
both required and planned.
Some of the key points of the talk were:
Major ATM contracts will be awarded this year: Newbridge is
on an effective short list of two for the Global One order
(Sprint, France Telecom, Deutsche Telekom) and is well positioned
at Southwestern Bell (it is a strategic partner) and AT&T. It
also has good odds at BellSouth and Bell Atlantic. Newbridge
recently won the Singapore telecom order ($35 million) and has
won (but has not announced) an ATM order for the global network
of one of Asia' very largest carriers.
Yesterday's board changes are designed to boost outside
representation. The retirement of Messrs Madsen, Sommerer, and
Rusheleau from the Newbridge board was in response to pressure
from the financial markets for a board with less insider
representation.
The new CEO Alan Lutz will address NNC's operational needs
and PR deficit. We expect that Mr Lutz (ex of Nortel and Compaq's
Networking Division) will focus on building operational strength
at NNC. As well, he will attempt to make the case for NNC and ATM
against the very effective barrage of distracting PR from Ciscoand Ascend.
NNC expects to see CSI endorsed by other major equipment
vendors this year. The Carrier Scale Internetworking alliance
(led by NNC, Siemens, and 3Com) is an attempt to define an
industrial-grade alternative to the "best efforts" type of
networking for IP which characterises the Internet. Cisco is
proposing MPLS as its standard. NNC is seeking to line up
everyone else.
TDM sales are rebounding as expected.
NNC is bidding on LMDS and ADSL access opportunities, some
of which could be announced in the Autumn. NNC now enjoys a much
broader carrier-level product line than it did last year.
Concerns expressed on Internet chat that the
Newbridge/Siemens alliance is under deep strain are false. The
36190 switch has shipped to a client for test, and the companies
continue to work together.
Newbridge's 40% stake in Ironbridge is valuable. NNC owns
40% of Ironbridge, a firm developing a terabit router. This technology will co-exist with ATM in network cores in the future.
This technology will be crucial to Newbridge (as will the WDM
technology being developed at Cambrian). We believe that Cambrian
and Ironbridge alone could be worth $250 million to Newbridge.
CONCLUSION
NNC is in the position of having come off of a year of confusion
and disappointing results in good measure caused by the losses
and distraction created by the UB acquisition. The company has
broadened its product line, and is now focusing on making sure
that its story is heard and understood. To this measure the new
President (Mr Lutz) is focusing on customer relations and turning
potential contracts into orders. While the potential is exciting,
we do not expect any imminent contract news. Newbridge is BUY
rated.
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