Newbridge meet sparks layoff fears
By Kevin Bell, Ottawa Sun
ALL Ottawa-area employees of Newbridge Networks Corp. have
been summoned to a mass meeting today to hear plans on how the
company will try to put its troubles behind it.
The mid-afternoon meeting at the Corel Centre, the first of its kind in
the firm's history, will take place as the board of directors puts its
stamp of approval on a management plan to boost profitability. A
board meeting yesterday continues today to develop a new strategy
after Newbridge issued its sixth profit warning in 10 quarters on
Nov. 2 and accepted the resignation of president Alan Lutz.
Newbridge has told employees chairman Terry Matthews and
president Pearse Flynn will discuss "the new product and solution
strategies, and changes required to refocus the business and build
momentum." The meeting will be broadcast to employees across
North America.
Some employees, however, fear layoffs may be imminent if the
board okays cost cutting.
"It sounds like it's going to be bad news," said one employee in
manufacturing. "Everybody I know doesn't know if they're going to
have a job by the end of the month."
Supervisors have been warning employees against making large
financial commitments in the near future, he said.
But "it's premature to comment" on layoffs, company spokesman
Christopher Fox said.
Earlier this week, a company insider said the board was expecting to
hear plans on possible downsizing or whether the beleaguered firm
should put itself up for sale.
Patrick Houghton, an analyst with Sutro & Co., said Newbridge's
problem is a lack of revenue, not its costs. But if costs are cut,
manufacturing may be vulnerable, he said.
"There are very few companies that do their own manufacturing,"
Houghton said.
As rumours continue to swirl about possible takeover bids, analysts
are watching for signs Newbridge is on schedule to ship its new
50-gigabit switch. The company is losing market share to Lucent
Technologies in its key U.S. market because it does not have a
high-capacity telecommunications switch.
Yesterday, Newbridge refused to comment on speculation European
telecommunication giant L.M. Ericsson Telephone Co. may be
interested in bidding for Newbridge.
"If we find an acquisition target which is big, then we will of course
present it to Ericsson's board," president Kurt Hellstrom told Reuters
yesterday. "If you're talking about Newbridge, then that would be a
large acquisition." |
