Newbridge denies Siemens relationship "in tatters"
Mr.Duncan and unknown analyst are again speculating on every word written in press, and always know Siemens-NN alliance better then members itself.Also they did not forget WIC but forgot about another LMDS win (Home Telephone ).
TORONTO, March 4 (Reuters) - Newbridge Networks Corp. (Toronto:NNC.TO - news) said there
was no truth to a newspaper report which said the relationship between Siemens AG (quote from Yahoo!
UK & Ireland: SIEG.F) and Newbridge was unravelling.
Newbridge spokespeople were adamant on Thursday, the third anniversary of the wide-ranging alliance
between the Canadian networking company and Siemens, that the union has ''never been stronger.''
Siemens stock jumped on Thursday after a New York Times newspaper report, citing executives close to Siemens that it was set to invest three
billion marks ($1.7 billion) in a U.S. data transmission venture. Siemens said it would hold a news conference regarding the matter in New York on
Monday afternoon.
Newbridge investors appeared undaunted by the report, bidding the stock up C$0.15 to C$37.85 on the Toronto Stock Exchange and 3/16 to
24-13/16 on the New York Stock Exchange.
The New York Times said Siemens was on the brink of creating a new American data networking unit, buying two private U.S. firms, investing in
another and hiring a International Business Machines Corp. senior executive.
The newspaper said the German company would buy a unit of networking group 3Com Corp. (Nasdaq:COMS - news), a major provider of Internet
protocol technology that allows for high-speed, high-volume data and voice communications over the Internet.
Most important to Newbridge, it also said the pact between the two companies -- which does not involve any equity ties -- was foundering.
''Newbridge has its own alliance with Siemens, but executives close to Siemens said the relationship was in tatters and the deals Siemens would
announce Monday would make clear that the relationship with Siemens is in trouble,'' the New York Times said.
Newbridge spokesman John Lawlor disputed the information in the report regarding the alliance.
''What I've been saying to financial analysts and investors the last little while is that in the three years since the alliance was announced, from my
prespective, I don't believe it's ever been stronger,'' Lawlor said.
''Siemens is now 20 percent of our total revenue. And the flipside of that is that Newbridge product represents about 50 percent of their data
communications revenue.''
Newbridge spokesman Paul Goyette said Chief Executive Alan Lutz called his ''counterpart in Munich'' on Thursday morning to discuss the
newspaper story and came away with the conviction that all was well between the companies.
Analysts said they were not certain what form the Siemens datacom unit would take, but it appeared likely to have a negative effect on Siemens' pact
with Newbridge.
''The phrase, the Newbridge-Siemens relationship is 'in tatters' -- that can't be a good thing,'' said Duncan Stewart, portfolio manager and
high-technology specialist at Tera Capital. He said he was not surprised Newbridge would deny difficulties.
''It is unlikely that Lutz would admit that the relationship is bad even if it were.''
One analyst, whose brokerage does not allow him to be identified, said Siemens is paving the way to make a break from the Kanata-Ontario based
company.
''They are weaning themselves off Newbridge,'' he said, adding if the details of the newspaper report were accurate, Siemens would need Newbridge
only for its asynchronous transfer mode (ATM) switch -- a switch which allows the high-speed transmission of voice, video and data across a
network.
There are a number of different networking products now in the joint venture.
This would be a fresh blow to Newbridge which last month lost a lucrative contract with WIC Western International Communications Ltd. unit
WIC Connexus for wireless communications equipment called local multipoint distribution system communications.
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3Com Corp (Nasdaq:COMS - news)
Newbridge Networks Corp (Toronto:NNC.TO - news)
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