TORONTO, Feb 12 (Reuters) - Shares of Canadian networking
firm Newbridge Networks Corp. <NN.N> slid lower in heavy
turnover on Friday after reports the company had lost a
lucrative contract.
Newbridge stock fell C$2, or 5 percent, to C$38 on volume
of more than 1.7 million shares, making it one of the most
heavily traded issues on the Toronto Stock Exchange.
In New York, Newbridge was down $1.63 to $25.50.
Reports on Thursday said WIC Connexus, a unit of WIC
Western International Communications Ltd. <WICb.TO>, had axed a
contract worth up to C$500 million with Newbridge and France's
Alcatel Alsthom <ALA.N>, originally unveiled in August of last
year.
U.S.-based Cisco Systems Inc. <CSCO.O> could end up getting
the contract, according to sources close to the deal.
The contract was for technology known as local multipoint
distribution system communications. It uses microwave
frequencies to provide a large bandwidth communication path
between two buildings, or a building and a cell site, to allow
the link of telephone service, Internet connections and more.
WIC Connexus's plans might have been scaled back after
parent WIC Western was taken over by Shaw Communications Ltd.
<SCLb.TO>, sources said.
Newbridge spokesman John Lawlor on Thursday said only that
the contract had been changed. He added that the Kanata,
Ontario-based company had not included significant revenue from
the deal in its forecasts.
David Beck, a TD Securities analyst, said the reports
"definitely spooked some people."
Another analyst, who declined to be identified, added that
Newbridge shares should be down two to three times as much.
"The worst possible scenario is to lose a contract to a
competitor," he said.
Beck said he had not factored in revenue from the WIC
Connexus contract in his projections for Newbridge and said he
sees the stock's drop as an opportunity to buy. "I think it's
gone to a very attractive level."
($1=$1.49 Canadian)
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REUTERS
Rtr 15:57 02-12-99
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