Ian:Circumstances force me to put my doctor hat on and look at TM as a patient.
This is in regards to Jill Vardy's article in the Financial Post.
It is clear to me that al is not well in Camelot.
The King is ill.
Let us examine Jill's write up:
Relations between Mr. Matthews and his board may have been
strained by the failed tenure of Alan Lutz
"Terry has less bargaining power with the board than he did
a year ago,"
" because it's perceived that he "made a bad decision on
Alan Lutz.
"But most of the people on the board are pretty sensitive
about their reputations
There is a
tremendous sense of responsibility to all the shareholders,
not just Terry.And Terry's been told that by the board."
We all get ill, even The Great Ones of us. Look at Howard Hughes.
Founded Hughes electronics, a great co; but then ended up locked in his
penthouse, being afraid to eat because he thought " food was
contaminated". " Lived in fear, with bodyguards around, all day ".
This is mental pathology.
Many of us have little bits of it because nobody's perfect.
So with Terry. A great engineer/entrpneur; granted.
But then there is the little problem of running a multibillion dollar co
that is actually paid for by share holders. When you grant
Engineers stock options , these options gain value only because
investors bid the shares up.Investors in turn expect a return on
their money.
TM has not delivered on that.
Not only that but at times he has been more pre-occupied with pet projects
in his hometown in Wales .
More importantly however he does not seem to take to heart the repeated
disappointments he has delivered his shareholders and keeps asking for
" give me one more sip ".
The pathology is that he exhibits a certain insensitivity to shareholders.
The other pathology is in thinking that he can continue to shape Telecoms future
single-handed with NN. Call it delusions of grandeur?
A delusion is mental pathology.
Nobody has enough brain power to shape telcos future course individually.
Even John Chambers at CSCO is humble enough to admit that and just go on
on a buying spree of the best individual brains around to build CSCO
in fact the original founders of CSCO are long gone.
I think that the NN Board is frankly fed up with this.
Relations between Mr. Matthews and his board may have been
strained by the failed tenure of Alan Lutz
"Terry has less bargaining power with the board than he did
a year ago,"
" because it's perceived that he "made a bad decision on
Alan Lutz.
Most of these folk I would bet you are level headed people who indeed
" But most of the people on the board are pretty sensitive about their reputations
There is a tremendous sense of responsibility to all the shareholders,
not just Terry.
So that I think they've had it with Terry.
And Terry's been told that by the board."
I think that the board next week is going to start pressuring TM to deliver.
A takeover, a very close alliance/partnership perhaps, a sale of minority
interest?
What about a hostile take over? The worst that can happen to the bidder is that they will
be rejected. But that ought to light the embers beneath TMs feet and perhaps
deliver the necessary wake-up electroshock therapy for Delusional Ideation.
Many of us have had Delusional ideation of grandeur some time in our lifetime. We got over it. It is a
remediable condition.
Having gotten all medical diagnoses and therapy off my chest,
I must conclude that other than that TM is a swell guy and would be
glad to meet him one day.
Nobody's perfect,
TA
.
.
.
.
.
Message #14511 from Ian Stromberg at Nov 13 1999 7:55AM
The plot thickens, ...or quickens, ... or something.
++++++++++
For Saturday, November 13, 1999
Tension mounts in Newbridge boardroom
Matthews 'a problem': Company denies takeover talks with European firms
By JILL VARDY
The Financial Post
OTTAWA - Terence Matthews, chairman of Newbridge Networks Corp., may be at odds with members of his own board over the prospect of the company's takeover by a
larger telecommunications equipment company.
The board of directors of Newbridge have not considered any takeover offer for the company in the past week. But they've been told to expect one or two for consideration at
their regular two-day board meeting next week, say sources close to the board.
Those acquisition bids are not welcomed by Mr. Matthews, Newbridge's chairman, founder and single largest shareholder, with 22% of the company's stock, say sources
close to the company's senior management.
"Definitely Terry is going to be a problem in any kind of takeover," said one insider. "But most of the people on the board are pretty sensitive about their reputations. There is a
tremendous sense of responsibility to all the shareholders, not just Terry. And Terry's been told that by the board."
Mr. Matthews was not available for comment yesterday.
European telecommunication giants Alcatel SA and L.M. Ericsson Telephone Co. Inc. are both rumoured to be mulling bids for Newbridge, whose share value plummeted last
week after it warned for the sixth quarter of the last 10 that its earnings and revenues would be lower than expected.
The stock rose $2.38 (US) or 13% yesterday to close at $20.63 on the New York Stock Exchange. During the session, the shares rose as high as $23.
But John Lawlor, Newbridge's vice- president of corporate communications, flatly denied yesterday that the company is in talks with either of the European giants.
"Newbridge is not in talks with either L.M. Ericsson or Alcatel about a possible takeover of Newbridge. In fact, Newbridge is not in talks with any other party regarding a
possible takeover of Newbridge," Mr. Lawlor said.
He said recent news stories that Ericsson is mounting a bid are "pure speculation."
He also denied news reports that senior Newbridge officials have been told to clear their schedules in case there's a major development over the next few days.
Lars Ostlund, an Ericsson spokesman, also refused to comment on "individual speculation."
"What we've said all along is that we have an acquisition strategy of small to medium-size companies," he told Reuters.
Analysts estimate the purchase price of Newbridge would be at least $4.3-billion.
Newbridge's board hasn't looked at any formal proposal to buy the company. But it has been told "to look out for some," said an insider, speaking on condition of anonymity.
Mr. Lawlor would not say if a takeover offer is expected. He did confirm the board will be asked to evaluate a strategic action plan next week to fix some of Newbridge's
production and sales problems.
Details of that plan are expected to be made public when the company's second-quarter earnings are announced next Thursday.
It would be difficult for any company to mount a takeover without Mr. Matthews' co-operation. He not only holds 22% of the shares but has tremendous loyalty from most of
Newbridge's executive and engineering staff.
"Any firm interested before in buying Newbridge would be more interested now because the stock price has been cut in half. But all approaches so far have been rebuffed,"
said Robert MacLellan, technology analyst at CT Securities Inc.
Relations between Mr. Matthews and his board may have been strained by the failed tenure of Alan Lutz, who was brought in as president to fix Newbridge's problems in
June, 1998. Mr. Lutz was fired last week after a year and a half on the job.
One source said: "Terry has less bargaining power with the board than he did a year ago," because it's perceived that he "made a bad decision on Alan Lutz. Terry took his
hands off the steering wheel and Alan didn't drive the car very well."
Mr. Matthews told the Post on Nov. 2 that he shares the blame for Newbridge's difficulties under Mr. Lutz's presidency. "I think personally I probably stepped back too far"
from daily management of the company, he said.
The regular board meeting next Wednesday and Thursday is scheduled to approve the company's formal second-quarter earnings release, due out after the close of markets
on Nov. 18.
But the board has been holding conference calls "almost every day" since Newbridge warned last Tuesday it would report earnings of 8c to 10c a share for the quarter, half
the amount analysts had expected.
Even more ominous for Newbridge-watchers was the fact that sales of Newbridge's flagship telecommunications equipment based on asynchronous transfer mode technology
actually fell for the first time in the United States.
Newbridge's new president, 36-year-old Pearse Flynn, has said his first priority will be to fix the problems in Newbridge's North American sales division. However, some
analysts speculate that sales may be off until Newbridge releases its next-generation high-speed ATM switch in the next month. An even faster switch is due for release early
next year.
Mr. Lutz did present the Newbridge board with two "scenarios for amalgamating Newbridge with another company" during his tenure. Both were rejected. Neither was
considered a formal offer and neither was from Ericsson.
While rumours abounded that Ericsson took a run at Newbridge last summer but was rebuffed, Mr. Lawlor said yesterday Ericsson and Newbridge did not discuss any
takeover deal last summer.
Ericsson management did form close ties with some senior Newbridge officials when the Swedish giant bought Newbridge affiliate Vienna Systems Corp. in September, 1998 |
