CBS MarketWatch : Alcatel reportedly in talks to buyÿÿÿ Newbridgeÿ
cbs.marketwatch.com
Alcatel reportedly in talks to buy
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridgeÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Won't comment on report it's set to bid over $6.5
ÿÿÿÿÿÿÿÿÿÿÿÿÿ blnÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿ By Gareth Vaughan, CBS MarketWatch
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Last Update: 12:22 PM ET Feb 18, 2000
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ NewsWatch
ÿÿÿÿÿÿÿÿÿÿÿÿÿ PARIS (CBS.MW) --ÿAlcatel SA, the French telecom
ÿÿÿÿÿÿÿÿÿÿÿÿÿ equipment maker, declined to comment on a press report
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Friday which said it's in talks to buy Canadian group
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge Networks Corp. for over $6.5 billion in stock.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel's director of media relations Klaus Wustrack, said
ÿÿÿÿÿÿÿÿÿÿÿÿÿ his company wouldn't comment on "speculation or
ÿÿÿÿÿÿÿÿÿÿÿÿÿ rumors." Citing people familiar with the situation The Wall
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Street Journal reported that a deal could be announced as
ÿÿÿÿÿÿÿÿÿÿÿÿÿ soon as next week.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ The U.K.-based
ÿÿÿÿÿÿÿÿÿÿÿÿÿ spokesperson for
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Networks' (NN:
ÿÿÿÿÿÿÿÿÿÿÿÿÿ news, msgs)
ÿÿÿÿÿÿÿÿÿÿÿÿÿ didn't return a call
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Friday.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Networks'
ÿÿÿÿÿÿÿÿÿÿÿÿÿ switches allow
ÿÿÿÿÿÿÿÿÿÿÿÿÿ voice, data and
ÿÿÿÿÿÿÿÿÿÿÿÿÿ video to travel
ÿÿÿÿÿÿÿÿÿÿÿÿÿ over networks at
ÿÿÿÿÿÿÿÿÿÿÿÿÿ high speeds.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Shares of Alcatel (ALA: news, msgs) added 0.40 euros to
ÿÿÿÿÿÿÿÿÿÿÿÿÿ 239.8 in Paris trading, while in the U.S. shares of the French
ÿÿÿÿÿÿÿÿÿÿÿÿÿ company sank 4 7/16, or 8.6 percent, to 47 1/8. Shares of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge Networks descended 2 1/16, or 5.8 percent, to
ÿÿÿÿÿÿÿÿÿÿÿÿÿ 33 5/16.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Acquisitive Alcatel
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel has been hot on the acquisition trail over the past 18
ÿÿÿÿÿÿÿÿÿÿÿÿÿ months. In 1998 the French company bought DSC, one of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ the largest suppliers of telecom equipment to U.S. regional
ÿÿÿÿÿÿÿÿÿÿÿÿÿ telecom firms. Then last year Alcatel bought U.S. data
ÿÿÿÿÿÿÿÿÿÿÿÿÿ networking companies Xylan Corp., Assured Access
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Technology Inc. and Internet Devises Inc. in an attempt to
ÿÿÿÿÿÿÿÿÿÿÿÿÿ keep pace with rivals such as Lucent Technologies Inc.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ (LU: news, msgs) and Cisco Systems Inc. (CSCO: news,
ÿÿÿÿÿÿÿÿÿÿÿÿÿ msgs), and boost its position in the U.S. market.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Analysts said the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ acquisition of the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Canadian
ÿÿÿÿÿÿÿÿÿÿÿÿÿ company would
ÿÿÿÿÿÿÿÿÿÿÿÿÿ fill a gap in
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel's product
ÿÿÿÿÿÿÿÿÿÿÿÿÿ line. "Newbridge
ÿÿÿÿÿÿÿÿÿÿÿÿÿ has a decent
ÿÿÿÿÿÿÿÿÿÿÿÿÿ ATM switch and
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel has a gap
ÿÿÿÿÿÿÿÿÿÿÿÿÿ there," said Susan
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Anthony,
ÿÿÿÿÿÿÿÿÿÿÿÿÿ London-based
ÿÿÿÿÿÿÿÿÿÿÿÿÿ telecom equipment analyst at Credit Lyonnais Securities
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Europe.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Anita Farrell, telecom equipment analyst at Merrill Lynch's
ÿÿÿÿÿÿÿÿÿÿÿÿÿ London office, said whether a takeover of Newbridge
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Networks would be beneficial to Alcatel would depend on
ÿÿÿÿÿÿÿÿÿÿÿÿÿ the price paid. She declined to say whatÿ the right price
ÿÿÿÿÿÿÿÿÿÿÿÿÿ would be.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Talk of a bid for Newbridge isn't
ÿÿÿÿÿÿÿÿÿÿÿÿÿ new
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Talk that Newbridge might be taken over
ÿÿÿÿÿÿÿÿÿÿÿÿÿ isn't new. Previously Ericsson AB [e:
ÿÿÿÿÿÿÿÿÿÿÿÿÿ ericy], Siemens AG (SMAGY: news,
ÿÿÿÿÿÿÿÿÿÿÿÿÿ msgs) -- and Alcatel -- are names that
ÿÿÿÿÿÿÿÿÿÿÿÿÿ have been linked to a possible bid for
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge Networks. The Canadian
ÿÿÿÿÿÿÿÿÿÿÿÿÿ company has recently undertaken a major
ÿÿÿÿÿÿÿÿÿÿÿÿÿ restructuring -- including a purge of 600
ÿÿÿÿÿÿÿÿÿÿÿÿÿ staff, or 10 percent of its workforce --
ÿÿÿÿÿÿÿÿÿÿÿÿÿ after failing to meet earnings expectations
ÿÿÿÿÿÿÿÿÿÿÿÿÿ in six of the last 10 quarters.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ In a bid to turn things around the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Canadian company replaced its chief
ÿÿÿÿÿÿÿÿÿÿÿÿÿ operating officer Alan Lutz, with Pearce
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Flynn, who had previously succeeded in
ÿÿÿÿÿÿÿÿÿÿÿÿÿ turning around the fortunes of Newbridge
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Networks' European, Middle East and
ÿÿÿÿÿÿÿÿÿÿÿÿÿ East Asian operations. See full story.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Earlier this month Alcatel posted a 24
ÿÿÿÿÿÿÿÿÿÿÿÿÿ percent rise in full-year operating income
ÿÿÿÿÿÿÿÿÿÿÿÿÿ to $1.26 billion, up from $1 billion a year earlier. The
ÿÿÿÿÿÿÿÿÿÿÿÿÿ French group added that it plans a five-for-one stock split
ÿÿÿÿÿÿÿÿÿÿÿÿÿ in May. See full story.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Credit Lyonnais' Anthony said she wasn't convinced that
ÿÿÿÿÿÿÿÿÿÿÿÿÿ buying Newbridge Networks would be a good move for
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel. "We're still waiting for the earnings benefits of the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ other acquisitions to come through. I'm a bit worried that it
ÿÿÿÿÿÿÿÿÿÿÿÿÿ might stretch Alcatel too far without being justified," she
ÿÿÿÿÿÿÿÿÿÿÿÿÿ said.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Analysts said that Alcatel still has some way to go to get its
ÿÿÿÿÿÿÿÿÿÿÿÿÿ margins up to respectable levels in the fast-moving telecom
ÿÿÿÿÿÿÿÿÿÿÿÿÿ equipment arena. "These things (acquisitions) have to boost
ÿÿÿÿÿÿÿÿÿÿÿÿÿ sales and revenue. Alcatel has 15 percent sales growth
ÿÿÿÿÿÿÿÿÿÿÿÿÿ versus Nokia (NOK: news, msgs) and Ericsson's 30-40
ÿÿÿÿÿÿÿÿÿÿÿÿÿ percent," said Anthony.ÿÿ |
