Mrclinton:
A little support for my response the other day:
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Newbridge Rises on Optimism Over MCI Venture Exit
Ottawa, Aug. 13 (Bloomberg) -- Newbridge Networks Corp. stock rose 9.8 percent amid optimism that the company will benefit from MCI Communications Corp.'s withdrawal from a venture that analysts feared was leaning toward doing more business with a Newbridge rival.
MCI, which has agreed to be bought by Worldcom Inc., yesterday said it will sell its stake in the Concert Communications Services joint venture back to partner British Telecommunications Plc. Some analysts feared that Worldcom's connection with Concert might hurt Newbridge because competitor Ascend Communications Inc. is a bigger Worldcom supplier.
Newbridge rose C$3.05 (US$2) to C$34.30 in Toronto on 2.16 million shares traded, more than triple the three-month daily average of 604,000 shares.
''BT is a big customer of Newbridge and that gives investors a better feeling about the prospects of Newbridge supplying that network,'' said Patrick Houghton, an analyst at Richmond, Virginia-based Wheat First Union. ''They have stronger relationship with BT than they have with WorldCom and I think it takes away some risk from Newbridge.''
Newbridge, with revenue of C$1.62 billion, makes high-speed data networking gear that phone companies use to send voice, data and Internet traffic. Concert, which provides data-networking services for companies, serves more than 3,800 customers in 50 countries.
Takeover speculation also fueled the jump. Last month, Newbridge President Alan Lutz told the Ottawa Citizen that takeover speculation surrounding the company were unfounded.
The name that has cropped up the most often among analysts has been Germany's Siemens AG, a telecommunications-equipment manufacturer, which has a distribution alliance with Newbridge and is the company's largest customer, representing 15 percent of its revenue.
Siemens and Newbridge officials declined to comment.
Houghton, who has a 12-month price target of US$40 on Newbridge, said the stock is inexpensive at current prices because of the company's long-term growth potential and the restructuring.
''At these prices, it's takeout bait,'' he said. Newbridge rose 1 11/16 to 22 7/16 in New York.
The stock touched a three-month low of C$29.15 Tuesday when the benchmark Toronto Stock Exchange 300 Composite Index shed 210.78 points, or 3.2 percent. The shares have dropped 64 percent below from their 52-week high of C$95 reached on Oct. 8.
Lutz, named president and chief operating officer on June 2, last month introduced a top-to-bottom reorganization aimed at cutting costs and boosting profitability.
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