News from The Globe and Mail :Acquisition by Alcatel would lead to pink slips at Newbridge
ÿÿÿÿ Acquisition by Alcatel would lead to pink slips at Newbridge: analysts
ÿÿÿÿÿÿÿ globeinvestor.com
ÿÿÿÿ by Simon Tuck - Tuesday, February 22, 2000
ÿÿÿÿ Ottawa -- Alcatel SA's expected acquisition of Newbridge Networks Corp. will likely mean layoffs for about 10 per cent
ÿÿÿÿ of the Canadian communications equipment maker's employees, including most of senior management, analysts say.
ÿÿÿÿ That would translate into pink slips for about 600 people.
ÿÿÿÿ Analysts said Newbridge's Kanata, Ont., headquarters would bear the brunt of layoffs, perhaps as much as half.
ÿÿÿÿ Neither Paris-based Alcatel nor Newbridge has confirmed they are in talks, much less whether there will be layoffs. But
ÿÿÿÿ industry sources say an Alcatel acquisition of Newbridge is imminent, coming perhaps as soon as tonight when Newbridge
ÿÿÿÿ reveals its third-quarter earnings.
ÿÿÿÿ Analysts said yesterday they would expect most of the cuts to come in administration, finance, marketing and, to a lesser
ÿÿÿÿ degree, sales.
ÿÿÿÿ Newbridge's manufacturing operations, some of which have already been partially outsourced, would also be vulnerable
ÿÿÿÿ under a new regime. Analysts expect that few company executives -- including founder and chief executive officer Terence
ÿÿÿÿ Matthews -- would be retained after an ownership change. John Lawlor, the company's vice-president of corporate
ÿÿÿÿ communications, resigned over the weekend.
ÿÿÿÿ "We'll see reductions there," said Michael Cristinziano, a technology analyst at Gerard Klauer Mattison & Co. in New York.
ÿÿÿÿ "[But] we're not talking massive layoffs."
ÿÿÿÿ Mr. Cristinziano said Newbridge spends about 30 per cent of its revenue on sales, marketing and other administration --
ÿÿÿÿ about twice as much as Alcatel.
ÿÿÿÿ Newbridge has about 6,000 employees worldwide, about half in the Ottawa area, while Alcatel has about 120,000
ÿÿÿÿ employees.
ÿÿÿÿ The safety zones for Newbridge employees would almost certainly be in the company's well-regarded research operations,
ÿÿÿÿ although its older time-division multiplexing (TDM) product teams could possibly be shut down or scaled back. Some of
ÿÿÿÿ Newbridge's engineers and other technical people, however, have already left in recent months as the company began to look
ÿÿÿÿ increasingly like an operation in trouble.
ÿÿÿÿ Others, however, are hanging on so they can cash in stock options with the expectation that a takeover will mean a premium
ÿÿÿÿ on Newbridge's share price.
ÿÿÿÿ Some analysts say Alcatel might not need to make extensive cuts at Newbridge, particularly since the Canadian company
ÿÿÿÿ already reduced its workforce in November by about 700 -- or 10 per cent -- including about 300 in the Ottawa area.
ÿÿÿÿ "They've done most of the layoffs already," said Gurinder Parhar, a technology analyst at Dundee Securities Corp. in
ÿÿÿÿ Toronto. "I don't think they'll need to do too much more."
ÿÿÿÿ But a Toronto analyst, who asked not to be identified, said the 10-per-cent figure could be too low. "I think it's possible
ÿÿÿÿ there could be huge layoffs." |
