Stanford purchase turned on Maxlink deal
Keith Woolhouse
The Ottawa Citizen
It was only last October when the paths of Newbridge Networks Corp.
and Stanford Telecommunications Inc. last crossed in a meaningful way.
Then, the news was that Newbridge had placed a production order for
broadband wireless modems and network interface units with the
Sunnyvale, California, company. The deal materialized after Newbridge
won a contract from WIC Connexus and Maxlink Communications, two
high-speed wireless telecommunications providers, for a heavy-duty
wireless system into which Stanford's technology was to be deployed.
The Stanford deal was never in doubt, but a shadow fell over it when
WIC Connexus dropped the Newbridge order in favour of Newbridge's
archrival Cisco Systems Inc. of San Jose.
Fortuitously, in the past 10 days, after months of anxiety, delays and
litigation, the wheel turned full circle. Maxlink bought out Connexus and
returned both contracts to Newbridge's fold. Suddenly, Stanford's
technology and its presence had greater importance and that culminated
yesterday with Newbridge's $490-million takeover of the Sunnyvale
company.
Stanford's importance to Newbridge was summed-up last fall by
Bernard Herscovich, vice-president, wireless networks: "Stanford
Telecom has demonstrated its ability to be first to market with products
that address the needs of our customers. This has enabled us to rapidly
deploy solutions and aggressively pursue new opportunities. Broadband
wireless technology has applications worldwide, including the United
States, South America, Asia Pacific and Europe."
A hint of what might lay ahead came from George Hendry,
then-president of Stanford: "Stanford Telecom and Newbridge enjoy an
excellent development relationship. Integrating our products into the
Newbridge end-to-end broadband wireless solution has enabled
Stanford Telecom to effectively address an emerging worldwide
market."
How close Newbridge and Stanford were to losing that market because
of the WIC Connexus dispute isn't known. But Newbridge's takeover of
Stanford has emphatically brought such future contracts back into the
bidding process. The WIC Connexus-Maxlink networks will deliver
high-speed Internet, data, telephony, and video services to business and
residential customers. The value of the Canadian deal is estimated at
$800 million.
Further orders for Stanford's equipment are anticipated as these
networks are deployed throughout Canada, said Mr. Herscovich.
Stanford Telecommunications, in the heart of California's Silicon Valley,
was founded in 1973 by three graduates of Stanford University. One of
the three, James Spilker, is now company chairman.
Outside of its home office in Sunnyvale it has plants in five U.S. states --
Massachusetts, Virginia, New Jersey, Maryland and Colorado -- and
employs 1,000.
It has wended its way since its early beginnings, a spokesman said, but
today it is in firmly focused on the design and manufacture of advanced
digital communications products and systems to establish or enhance
communications via satellites, terrestrial wireless and cable.
Stanford's technical strengths are in system design, communication
waveforms, modulation and demodulation techniques, ASIC design,
radio frequency antennas and converters, software and firmware,
asynchronous transfer mode design and advanced manufacturing
techniques and processes.
For Newbridge, the addition of the Stanford equipment will enabled it to
offer TDMA (time division multiple access) technology to its customers.
TDMA effectively shares bandwidth among a number of end-users and
is optimal for combining variable rate and fixed data rate connections on
the same channels.
Stanford has had a sterling run on the Nasdaq exchange, where the
company's shares are traded.
At this time last year, the shares (all figures in U.S. dollars) were settling
at $13 5/8. They fell to a 52-week low of $6 7/8 in early October, but
roared back with a vengeance this year to close yesterday at $27 9Ú16,
a 52-week high. The year-over-year return is 116.33 per cent and they
have gained $13 5/8 for a 105.83-per-cent return since Jan. 1.
Stanford reported record bookings and backlog along with near-record
revenues in April when it released its fourth-quarter and fiscal '99
earnings.
Revenue for the fourth-quarter, ending March 31, increased seven per
cent to $43.2 million. compared with the same quarter in 1998.
Revenues for fiscal 1999 increased eight per cent to $165.4 million
Net income and earnings per share for fiscal '99 were $1.3 million and
10 cents, respectively, compared with net income and earnings per share
of $5.2 million and 40 cents, respectively, fiscal 1998.
Stanford attributed its weaker profits to its "large investment" in
development of its wireless broadband family of products. Operating
income from base business operations of $15.6 million was essentially
equal to the operating loss incurred by its wireless broadband subsidiary.
During the fourth quarter Stanford reported a "significant increase in new
contract bookings" leading to record high quarterly and annual bookings
as well as record high backlog. The company recorded an increase in
contract bookings of 66 per cent to $65.5 million as compared to fourth
quarter fiscal 1998 bookings of $39.5 million.
The fourth-quarter bookings surpassed the company's previous record
bookings quarter of $47.1 million set in the fourth quarter of fiscal 1997. |
