Deal with U.S. military buoys
Newbridge
By KEVIN BELL, Ottawa Sun
A breakthrough sale to the U.S. military helped to power
Newbridge Networks Corp.'s stock to a 10% increase
yesterday.
Newbridge shares closed at $51.05 on the Toronto Stock
Exchange, up $4.55.
The stock began to climb yesterday after the company
announced it will provide a networking solution to critical
communications equipment in the U.S. Defence Department's
agencies in South Korea.
The navy, army and air force agencies protect the demilitarized
zone separating North and South Korea.
Analysts said the deal is not worth a lot of money, but some said
it gives Newbridge prestige in the American market and could be
an advantage in winning future contracts with the military.
"It's a good sale, and it's a highly competitive contract," said
Gurinder Parhar, of HSBC James Capel Canada Inc. "They
were able to beat Ascend, Nortel and Lucent."
The fact that Newbridge met the high standards of the U.S.
military will rub off on the company, he said.
But American analysts said the deal is small change.
"I would consider that a fairly run-of-the-mill thing," said Paul
Sagawa, a networking analyst with New York-based Sanford C.
Bernstein & Co.
"It's a nice sale, but I don't see it bringing an avalanche of U.S.
government work."
He said it's more likely Newbridge is playing catch-up with U.S.
competitors Ascend Communications and Cisco Systems, which
have seen their stock prices rise significantly in recent weeks.
Michael Neiberg, an analyst with ING Baring Furman Selz of
New York, said Newbridge's climb was on the coat-tails of
other telecommunications stocks that got fired up yesterday.
"The whole telecom sector is just having a good day -- it's just
the sentiment of the day," he said.
Nortel Networks also went along for the ride, tacking on 10% to
its share price. The company's shares closed at $86.00 on the
TSE, up $8.10.
|
