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Technology Stocks : Newbridge Networks

NN 14.52

+6.1%

Dec 3 3:59 PM EST

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To: Luc Glinas who wrote (7229)	11/2/1998 11:18:00 PM
From: Gary Korn	Read Replies (3) of 18016

I'll report some of the highlights of the Merrill report: Overview: "We came away from [a meeting with Alan Lutz] with the belief that significant improvements in strategy, focus, management and product lines were underway. . . . The current quarter is a seasonally challenging one and we will wait until November 24 before changing our estimates and valuation, but overall we are encouraged by the longer term outlook." Report Headings: o "Telecom market weakness not impacting Newbridge" o "New alliances expected and Siemens rejuvenated" o "Current quarter a tough one" o "New external management talent" o "Focus on competing with Ascend and Cisco" o "More pragmatic M&A strategy": ". . . We were left with the impression that Newbridge would have to consider a friendly bid at a reasonable valuation but we do not believe this is a significant part of its strategy" o "New product plans" o "Review of Assumptions: - WAN packet revenue will grow 45-50% this year and 40% next" - Gross margins will hold at the 59-621% level. No pricing pressure. Gary Korn

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