WE NOW HAVE THE OFFICIAL FRIDAY 13th OTTAWA SUN FORCAST FOR NEWBRIDGE. SO I MUST BE TRUE (vbg)
No news good for Newbridge
Silence has analysts hopeful
By KEVIN BELL, Business Editor, Ottawa Sun
FOR NEWBRIDGE investors, silence is golden.
Twelve days after the company closed the books on its first
quarter, the company's silence is being taken as a sign by analysts
that things probably turned out well. For a company that has
issued profit warnings in five quarters of the last eight, the lack of
news is being greeted with a sense of relief.
"The assumption is that if we haven't heard anything by now,
everything is okay," said Michael Neiberg, an analyst with
Hambrecht & Quist in New York. "The assumption is that they're
hitting their targets."
Newbridge Networks Corp. is in its traditional quiet period
before reporting financial results on Aug. 24.
But analysts say the company is facing a crucial test in the
investment community.
"For the past eight to 10 quarters, it's been like a coin toss," said
Patrick Houghton, an analyst with Sutro & Co. in San Francisco.
Missing this quarter could demolish Newbridge's credibility, he
said.
"It would also be a matter of a lack of execution skills. But I think
they're going to make the quarter."
Newbridge issued a profit warning last May for its fourth quarter.
The company said manufacturing snafus prevented the firm from
delivering equipment despite a strong intake of orders.
Neiberg said Newbridge needs to dispel deep skepticism in the
market over future prospects. "I would say this quarter is a must."
He said he wants a quarter with no surprises. He's predicting
earnings of 17cents a share on earnings of $490 million, which is
close to analysts' consensus. A year ago, Newbridge made
20cents a share on $426 million in revenue.
"The key to this quarter is that they left some customers in the
lurch. If you don't please your customers, they have options on
who else they can buy from," Neiberg said.
Analysts are also looking for signs that the company's revenue
growth can exceed the 10% posted last year and can approach
those of competitors, such as Cisco Systems Inc. which has
grown revenue by more than 30%, Neiberg said.
"It's a 'show me' quarter," he said. "Show me that you can benefit
from the growth that is driving other businesses." |
