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Technology Stocks : Newbridge Networks

NN 11.97

+5.3%

Nov 21 9:30 AM EST

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To: MD Bryant who wrote (6906)	10/8/1998 10:37:00 AM
From: Doug	Read Replies (1) of 18016

M.D.B: . I have learnt long since that dogmatism can lead to massive failures in Market Strategies. As such for the record,I have never stated NN will not meet their EPS. Instead, I place my reliance on probability theory taking into a/c the past. I consider that probability of NN meeting its forecast EPS is currently less than 50% for the following reasons. a:Current Economic situation shows a Contraction of Global capital resulting in postponement of Capital goods orders in Countries outside Europe & N.America. b:Intense price Competition for market share. The Margins for NN have been decreasing. c:Heavyweights indicate growth in TELECOM is expected to be 14% for next 3 yrs. d:NN's N.American Sales have been weak traditionally. The leadership vacum recently created remains to be filled. e:The Industry Reports recently mentioned by NN were published in 97. The 98 Figures were not made available although other Companies (ASND) are using the 98 Figures. One should also remember that a probability distribution for EPS is not a normal Guassian but skewed in the direction of failure. This is because historically, more Companies fail to meet their targets than exceed them.

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