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Technology Stocks : Newbridge Networks

NN 17.07

+0.2%

Dec 26 9:30 AM EST

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To: nick cash who wrote (2580)	12/13/1997 5:05:00 PM
From: Andrew	Read Replies (1) of 18016

Thanks for the response Nick. You made a good point about the UB sales force. It certainly seems like their achievements so far fit your analysis. I don't have any insight into this. I just wanted to clarify what NN was hoping to get out of the purchase. $100M certainly is a lot of money to pay for a sales force. But IF this experienced sales team with extensive experience and contacts in an area NN is not strong in could kick start NN's brand recognition in the LAN arena, future dividends could make $100M look like pocket change. And I think we all get a little anxious looking for quick results. It takes time to integrate another company's sales team into the program. It takes time to build brand recognition and reputation in a new market. It hasn't even been a year yet. Granted, one would hope to see some progress. It's definately time consuming and expensive to achieve this. Will it be a worthwhile investment? I don't know. Maybe it would be a lot easier to really get in bed with 3Com and leverage off of their brand and sales force. But less risk and less investment = less profit. Of course if the in-house products tank, you lose money. I don't blame them for trying, and I think the jury is still out. VIVID is a work in progress. And they can simultaneously pursue the 3Com alliance anyway, so it's not like it's an either/or proposition. As for MCI/BT/WCOM/ASND/UUNet, this worries me too. Has there been any rumblings about whether the MCI deal is in real jeopardy? I can't remember if it was a letter of intent or a real contract. It would be a real blow to lose that one, but there are other big fish out there. Long term, I don't think frame relay is going to drive ATM acceptance. I think ASND/CSCC has to decide if they are going to commit to ATM completely (vs. FR), or risk being leapfrogged faster by more focused ATM cos. They only have so many people to work on projects. It's pretty obvious if you live in Ottawa that NN is not sitting still on the R&D front. You could argue that ASND has leapfrogged NN with certain features like OC-48 or something. But like you said, NN was way ahead of them in getting the 36170 out. That implies that NN is also way ahead in product development. A hard working and savvy leader will not relinquish the initiative. A good head start is extremely valuable. Let's hope NN continues to make aggressive moves to hang on to it. Andrew

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