Newbridge stock drops despite more rumors
biz.yahoo.com
TORONTO, Nov 20 (Reuters) - Newbridge Networks Corp. (Toronto:NNC.TO - news) (NYSE:NN - news) stock dropped on Friday despite more talk that U.S.-based Lucent Technologies Inc. (NYSE:LU - news) was poised to acquire a stake in the telecommunications and networking company.
Rumors that Lucent was taking a 15 percent equity block in Kanata, Ontario-based Newbridge failed to bolster its share price, which fell C$1.75 to C$38.60 on the Toronto Stock Exchange.
The drop comes after a week of strong gains on the back of similar speculation. Newbridge opened at C$32.40 on November 17.
In New York the stock fell $1 to $25.13 on Friday.
Newbridge, which did not return telephone calls, had dismissed rumors of takeovers or major contracts in news reports.
The Lucent speculation, which has been around for months, could have been a factor in recent gains, said Duncan Stewart, portfolio manager at Tera Capital.
''The rumor on the street is that it's Lucent and Newbridge,'' Stewart said. ''It's just a rumor but I'm attaching some credence to it ... because it makes lots of sense.''
Stewart believes that the companies would make a good fit, given the fact that Lucent could benefit from Newbridge's strong presence in the (asynchronous transfer mode) ATM market.
Another analyst disagreed, saying that if Newbridge linked up with Lucent it would lose its partnership with Germany's Siemens AG (quote from Yahoo! UK & Ireland: SIEG.F).
''I think the odds of Lucent buying Newbridge are very, very low,'' he said. If a deal occurred, rival Siemens would likely break off contact and Newbridge would lose the sales that Siemens brings in.
Instead, Lucent, which has been expected to make a big acquisition for a while, is more likely to match up with Ascend Communications Inc. (Nasdaq:ASND - news), the analyst said.
($1 = $1.54 Canadian)
Friday November 20, 5:03 pm Eastern Time
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