Newbridge shares fall after contract loss
Thursday March 19, 5:11 pm Eastern Time
TORONTO, March 19 (Reuters) - Newbridge Networks Corp [NYSE:NN - news]
shares tumbled after the company failed to win a contract with Deutsche
Telekom AG (NYSE:DT - news; DTEG.F), the world's third-largest
telecommunications carrier.
The stock fell to a low of C$37.80 from yesterday's close of C$40.85
before partly recovering to trade C$1.20 lower at C$39.65 in turnover
of 552,604 shares. On New York, the stock fell to US$27 before recovering
to 11/16 lower at 28-1/16.
''This is bad for Newbridge. Given their close relationship with
Siemens, Deutsche Telecom was probably assumed to be in Newbridge and
Siemens' back pocket,'' said Duncan Stewart, portfolio manager at Tera
Capital.
Deutsche made the asynchronous transfer mode equipment resale and
distribution deal instead with FORE Systems Inc (FORE - news), which
comes as a heavy blow to Newbridge's concentrated efforts to boost ATM
development.
Now analysts are again raising red flags about the future of Newbridge
stock.
''Those who want to live for volatility for all means partake in
buying this stock,'' said Richard Woo, an analyst with Thomson
Kernaghan & Co. ''But it's not for those who want to sleep a little
better at night.''
The announcement follows three consecutive disappointing quarter
results, and three months before fourth quarter results are in.
''If you're a husband and he cheats on you three straight times,
how would you feel?'' said Woo. ''Some people are investing their
life savings in this. I would like to see some very strong financial
results before I am positive about this stock.''
With Lucent Technologies Inc (LU - news), Northern Telecom Ltd
(NYSE:NT - news; NTL.TO - news) and Cisco Systems Inc (CSCO - news)
all bidding on the same accounts, Woo said that ''anything could
happen.''
''It's very competitive out there and the pie is only so big,'' said
Woo, adding that an excess of employees was detrimental to revenue
figures.
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