Silicon Valley: H&Q Conference Notebook: Newbridge, Ascend and Fore
By TSC Staff
4/29/98 5:05 PM ET
SAN FRANCISCO -- The sooner Newbridge's (NN:NYSE) old technology dies,
the better.
Newbridge Vice Chairman Peter Sommerer made that plain early Wednesday
at the Hambrecht & Quist Technology Conference. An older product line
called TDM, still almost 40% of revenue, likely will stop growing. TDM
helped Newbridge disappoint Wall Street yet again in the January
quarter. Sommerer expects TDM to fall to 20% of revenue, but the company
won't withdraw from the market.
"He basically said we're going to keep market share in a dying
business," laughs one investor.
But the stock traded higher Wednesday after Sommerer explained what will
drive growth -- so-called "frame relay" and "asynchronous transfer mode"
or ATM boxes, which move digital chatter through the core of a phone
company's network. A single box can carry five-sevenths of the entire
phone traffic in the U.K., according to Sommerer. And carriers have only
begun to buy. "Newbridge is in a wonderful position" if carriers swing
to ATM in full force, says the investor.
Another pro shies away from Newbridge. "To jump in with that much
exposure is kind of risky," says analyst John Golden with John Hancock
Funds. He isn't invested in Newbridge, although he likes its new ATM
gear.
Golden adds that another threat is the severe competition from Ascend (
ASND:Nasdaq), whose frame relay ATM boxes are winning lots of contracts
with phone carriers.
Newbridge shares were up 1 15/16 to 28 3/4 Wednesday. |
