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Technology Stocks : Newbridge Networks

NN 14.54

+2.7%

Jan 14 3:59 PM EST

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To: Sans Souci who wrote (2377)	11/4/1997 4:57:00 PM
From: Method	Read Replies (2) of 18016

Newbridge tumbles after Q2 warning TORONTO, Nov 4 (Reuters) - Shares of Newbridge Networks Corp (NN) lost more than 13 percent at Tuesday's open on the Toronto Stock Exchange after the computer networking company said it was ''disappointed'' by its preliminary second-quarter results. Newbridge topped actives in Toronto, dropping 11.30 or 13.7 percent to 70.75 in trading of more than 1.8 million shares. In New York the stock fell 7.75 to 50.50 on 1.5 million shares. Newbridge said late on Monday its preliminary results showed that earnings for the second quarter ended November 2 would slip below first quarter numbers of C$0.34 a share by 10 to 15 percent. Second quarter revenues would equal first quarter's figures at C$435 million, versus C$316 million in 1997's second quarter. Analyst Rob McLellan from SBC Warburg Dillon Read said the warning was a surprise but he still maintained his ''buy'' rating since profit margains were increasing despite the revenue blip. ''I think it's unexpected, (but) it's not a big short fall,'' McLellan said. Brokerage Merrill Lynch said on Tuesday that it cut the company, based near Ottawa, to near-term neutral from accumulate. It kept Newbridge as a long-term accumulate. McLellan noted that company officials issued the warning a day after brokerage J.P. Morgan raised its rating on Newbridge to buy from long-term buy. He said that Newbridge may have been concerned that investors would react more harshly if it did not disclose the disappointing news until the November 25 earnings release date. Newbridge officials were unavailable for comment. McLellan set a 12-month target price of US$65.

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