Newbridge sells firm
Swedish telecom giant buys affiliate for $285M US
By SIMON TUCK, Ottawa Sun
NEWBRIDGE Networks has sold majority ownership of one
of its affiliates to fellow telecommunications giant Ericsson AB,
the companies announced yesterday.
The Swedish company paid $285 million US for Advanced
Computer Communications (ACC), a network access firm not
considered one of Newbridge's stronger affiliates. The deal is
unusual in that Newbridge will maintain a relationship with ACC,
including research, manufacturing and reseller arrangements, and
will continue to sell ACC's network routing and Tigris remote
access technologies.
Ericsson will also work with Newbridge to develop a new
computer network system to speed up data transmission on the
Internet, the Kanata company said.
At least one analyst described the ACC sale as "an absolutely
superb deal" from Newbridge's perspective.
"ACC was not one of Newbridge's shining jewels," said Duncan
Stewart, a technology analyst at Tera Capital Corp. in Toronto.
"I think any price they get for it would have been a good one and
I think this was an excellent one."
But Robert MacLellan, of Kearns Capital Limited in Toronto,
called the move "a step back" because, he said, Newbridge
needs to expand its product line not reduce it.
On the other hand, MacLellan said it's encouraging that
Newbridge may be starting to act more strictly -- like a venture
capital firm -- with its affiliates.
Although Newbridge boss Terry Matthews said yesterday the
company has no plans to alter its affiliate strategy, the ACC sale
may be part of a corporate restructuring triggered by the
appointment of new president Alan Lutz.
Stewart, however, said Lutz is likely behind the changes. "It
appears something is going on there.
"The affiliate program will look enormously different in a year
from how it looks today."
Matthews also denied that the Ericsson deal has any connection
to Newbridge's tumultuous relationship with Siemens AG, its
German partner. "(This deal) is not against our interests with
Siemens or anybody else."
But Stewart described it as "an encouraging sign that the
Newbridge-Siemens relationship is perhaps deteriorating but that
there are potential successors lining up."
Newbridge is coming off a disappointing period. It announced
profits of $35.5 million for the three months ended Aug. 2, well
below the $64.4 million it made in the same 1997 period.
Newbridge shares have dropped by about two thirds in less than
a year, from a high of $95, closing yesterday at $32, up 60cents.
Much of the firm's problems stem from losses at UB Networks,
the California-based computer networking firm acquired early
last year for $147 million. |
