briefing.com
NEWBRIDGE NETWORKS LTD. (NN) 26 1/16 -3 15/16. While most computer
networking stocks are enjoying a plus day in the market, shares of this developer of a
desktop-to-desktop family of networking products are not part of the rally after the company
reported Q4 results that were in line with market expectations. Though such news should
be viewed as a positive given recent disappointing results Newbridge had reported, apparently
the company's earnings of $0.13 a share are being compared to whisper numbers that called
for a profit of a couple of cents higher. Revenues for the period rose to $395 mln, a 10%
increase on a sequential basis, but 10% lower than in the year-ago Q4 period. In addition,
the company suggested that expenses in the new fiscal year are likely to rise above the
level Wall Street had anticipated as competition in the asynchronous transfer mode market
intensifies, particularly as large players like Lucent Technologies (LU 70 1/2 -1 3/16) make their
presence more pronounced. This all means that Newbridge will continue to experience
pricing pressures in its main market, which will put additional pressure on gross margins. Last
night's report and today's stock activity has not prompted analysts to retreat from continuing to
recommend the stock, however, as Cowen & Co. has reiterated its "strong buy" rating on the
stock, while Wheat First Union also continues to rate the stock a "buy." It has done little good
as shares of Newbridge are giving back all of yesterday's pre-earnings release gains and more
as investors feel that the planned recovery in earnings visibility is still too far into the future.
**************************
Close DJIA -87.44 at 8803.80, Nasdaq -18.36 at 1743.43, S&P -10.49 at 1082.73:
Equity market made its token push higher at the open, bolstered by news of a $7.1 bln
Tellabs-Ciena merger... In characteristic fashion, however, the gains soon faded, and while the
market traded in a narrow range for most of the day, it sold off dramatically in the final hour of
trading as the tech sector capitulated to profit taking efforts... This tech malaise was a
disappointing development, indeed, and prompted broad-based selling which left the indices
trading at, or near their lows of the session, and which is likely to carry over into tomorrow's
trading... Given the market's inability to mount, and sustain a rally, it is evident that this
correction still has room to run... Leading the tech fallout was Intel (INTC -3 5/16) and the chip
stocks... Yet, virtually every tech category came under fire... In the broader market, hospital
management, tobacco, and oil drilling stocks were among the hardest hit while airlines were
about the only notable group to end the day with decent gains... DJTA +31.28... DJUA -0.78...
SOX -7.88... XOI -4.80... Nasdaq 100 -1.8% |
