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Technology Stocks : Newbridge Networks -- Ignore unavailable to you. Want to Upgrade?

To: Ian@SI who wrote (11974)	6/23/1999 2:14:00 AM
From: pat mudge	Read Replies (4) \| Respond to of 18016

Two quotes from the summary of the transaction from an analyst friend: "STII makes modems and components for the MMDS, LMDS, and cable modem markets. NN's acquisition of STII will get them all of the necessary components for a fully featured access switch. They already have DSL, MPEG-2, and compressed voice cards. NN will now own the ARIC (ATM radio interface card) for LMDS applications. They will also develop a cable modem card through the Stanford group. . . ." "Wall Street does not really understand what NN is building. They are leveraging their unassailable position in ATM core networks in order to capitalize on the massive access opportunities using wireless, cable, fiber, or copper media.. . ." From Stanford Telecom's website, you can read about their Wireless Broadband Products Group: stelhq.com You can also view the slides used in today's webcast: newbridge.com The last frame shows a diagram of the products being retained. As for how the investment community will view the acquisition, I'm certain analysts will fine-tune their numbers, weighing added revenues against increased shaes, and release comments over the next few days. Strategically, it's a brilliant move and I'm anxious to know how it will impact the competition in terms of NN's having control of products they may need. That's it for now --- Pat

To: Ian@SI who wrote (11974)	6/23/1999 6:49:00 AM
From: Glenn McDougall	Respond to of 18016

Newbridge buys a new wing Stanford telecom: California company has expertise in a hot wireless segment Jill Vardy Financial Post OTTAWA - Newbridge Networks Corp. turned the tables on market rumours yesterday by announcing it will buy Stanford Telecommunications Inc. in a deal worth $490-million (US). The news comes after Newbridge shares rose sharply on rumours it might be the target of a takeover attempt by a larger telecommunications company. But it was Newbridge's turn to do the buying yesterday, picking up the portion of Stanford Telecom, a Sunnyvale, Calif., company that fits with Newbridge's new line of wireless broadband telecommunications business. The complicated stock transaction will end up costing Newbridge a net $280-million (US). Newbridge and Stanford have worked together before. Stanford supplies some equipment for Newbridge's local multipoint distribution service (LMDS), a wireless telecommunications network that helps companies send fast, cheap voice and data messages at very high frequencies. Since Newbridge began offering LMDS network equipment, it has signed 15 deals as an equipment supplier, and is in a further 13 trials with potential customers. "The LMDS market is getting hot . . . There is a very significant market opportunity here," said Alan Lutz, Newbridge's president and chief operating officer. He said Newbridge expects to report LMDS revenue of $100-million this year, $300-million next year, and $600-million in the following fiscal year. Stanford will help Newbridge achieve those goals by supplying key equipment needed to build those LMDS networks. "You could easily consider this a sector consolidation movement to lock up sources of supply," Mr. Lutz said. Analysts are optimistic about Newbridge's prospects in the market for LMDS or, as it is known in Canada, LMCS (local multipoint communications services.) "LMDS is going to become a significant market over time, and Newbridge has clearly the better solution. I expect you'll see some significant wins over time in that area," said Paul Silverstein, technology analyst at BancAmerica Robertson Stephens in New York. Newbridge will pay $490-million (US) for all the stock of Stanford, minus the value it will receive from the proceeds arising from the sale of several of Stanford's business units that Newbridge doesn't want. It is Stanford's responsibility to sell those businesses and pay Newbridge a minimum of $210-million (US). That reduces the cost of the transaction to Newbridge to $280-million (US). Stanford shareholders get for each share of their stock $30 (US) in Newbridge stock, plus some extra arising from the sale of the Stanford business units Newbridge doesn't want. The deal hinges on Newbridge's stock being worth at least $24 (US) at the time of the transaction. Mr. Lutz said he expects the deal to be neutral to Newbridge's earnings per share in the first year and to increase earnings per share in following years. Stanford, a 25-year-old company with 1,050 employees, reported revenues of $165-million (US) in its 1999 fiscal year ended March. It began offering wireless broadband products in 1995. Val Peline, Stanford's president and CEO, said Stanford's five business units not wanted by Newbridge will likely all be sold by August. The results were released after the close of markets. Newbridge shares last traded at $45 in Toronto and at $30.75 (US) in the United States. It is Stanford's responsibility to sell those businesses and pay Newbridge a minimum of $210-million (US). That reduces the cost of the transaction to Newbridge to $280-million (US). Stanford shareholders get for each share $30 (US) in Newbridge stock, plus some extra arising from the sale of the Stanford business units Newbridge doesn't want. The deal hinges on Newbridge's stock being worth at least $24 (US) at the time of the transaction. Mr. Lutz said he expects the deal to be neutral to Newbridge's earnings per share in the first year and to increase earnings per share in the following years. Stanford, a 25-year-old company with 1,050 employees, reported revenues of $165-million (US) in its 1999 fiscal year ended March. It began offering wireless broadband products in 1995. Val Peline, Stanford's president and CEO, said Stanford's five business units not wanted by Newbridge will likely all be sold by August. The results were released after the close of markets. Newbridge shares last traded at $45 in Toronto and at $30.75 (US) in the United States.