Investors lock up shares in CrossKeys
By KEVIN BELL, Money Editor, Ottawa Sun
A surprising price surge by CrossKeys Systems Corp.'s stock is
likely being triggered by speculation it could be scooped up in any
sale of Newbridge Networks, analysts said yesterday.
CrossKeys shares soared by 40% over the last two days to close at
$10, up from $7.15 at Tuesday's close on the TSE.
CrossKeys, an affiliate of Newbridge, would be a top candidate of all
Newbridge affiliates to be taken over if Newbridge is successful in
finding a buyer, said Rob MacLellan, an analyst with CT Securities.
"CrossKeys is a very cheap way to buy Newbridge," he said.
A large portion of CrossKeys' software sales are tied to sales of
Newbridge's ATM (asynchronous transfer mode) products, and
Newbridge and its chairman Terry Matthews already own more than
40% of the company.
"It doesn't make a whole lot of sense to leave it where it is,"
MacLellan said.
Another possible reason for the surge is simple timing. CrossKeys
reports its quarterly results next week, and its stock was beaten up
because it is associated with embattled Newbridge.
If investors were bracing for a pre-announcement of a profit
warning, it would have done it by now.
"They haven't pre-announced, so everything is all right," MacLellan
said.
But Barry Richards, an analyst with Sprott Securities, said
CrossKeys is more likely benefiting from being mentioned in a news
release Wednesday by Toronto-based Architel Systems Corp.
The company said the Kanata firm is co-operating with Architel,
Cisco Systems and other big telecommunications firms to develop a
next-generation system to carry voice and data signals.
"They're working with some very big players," Richards said. --
Kevin Bell |
