Newbridge lands networking deals
By SIMON TUCK, Ottawa Sun
Newbridge Networks landed portions of two major contracts
yesterday that should bring the Kanata-based firm about $500
million over the next four or five years.
Both contracts are to provide the guts of new wireless networks
for Canadian customers, major wins in Nortel's geographic and
technological backyard. "It's definitely going to give Newbridge a
pat on the back to beat out Nortel on both of these," said Robert
MacLellan, a technology analyst with Kearns Capital Ltd.
Newbridge is expected to land most of the $400 million that
MaxLink Communications plans to spend on Canada's first
commercial local multipoint communication system (LMCS). The
new network, the product of more than a year of work between
MaxLink and Newbridge, will provide voice, video and data
services to 33 Canadian markets.
Newbridge is also expected to get about half of the $450-500
million Western International Communications Ltd. (WIC) plans
to invest in its own LMCS network. It's expected to be
introduced throughout Canada in the first quarter of next year.
Telecommunications giant Alcatel is the other partner in the WIC
Connexus deal and will provide the radio frequency portions of
the network.
The two wireless networks will have the ability to provide
high-speed Internet access, data services, telephone traffic, and
videoconferencing, encryption, video monitoring and distance
learning and medicine.
Newbridge spokesman Paul Goyette said the company wouldn't
release the value of the contracts but "a substantial portion of the
network cost will come to Newbridge."
MacLellan said Newbridge should earn $492-550 million from
the two contracts and will charge gross margins of about 59% --
the industry average -- in the first year or two. But MacLellan
warned that the revenues have already been included in
Newbridge's numbers and shouldn't have much impact on
analysts' figures. He also said the wireless industry has a poor
record of fulfilling its promises. "It's good news but we have to
put a question mark beside them."
Newbridge shares fell 60cents yesterday on the TSE to close at
$35. |
