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

To: Chris Stovin who wrote (12406)	7/27/1999 8:05:00 PM
From: zbyslaw owczarczyk	Read Replies (1) \| Respond to of 18016

To many rumors worth nothing, like that two weeks ago involving Silverstain. Better to focus on fundamentals. Zbyslaw

To: Chris Stovin who wrote (12406)	7/28/1999 12:09:00 AM
From: New Economy	Respond to of 18016

Todd Coupland Of CIBC World Markets Discusses... of merger and acquisition activity in WAN equipment companies: stockhouse.com Todd Coupland Of CIBC World Markets Discusses The Emergence Of Newbridge Networks Into The Broadband Market I copied this from the interview: StockHouse: Is Newbridge still a takeover target? Todd Coupland: There has been a lot of merger and acquisition activity in WAN equipment companies and there are still publicly stated M&A strategies by companies who want to acquire, in the area that Newbridge has technology and market share leadership. So you have to believe that Newbridge is on those companies' radar screens. Whether or not a takeover bid materializes for Newbridge, it's hard to say, but they definitely, potentially could be a target. Newbridge Networks [NN] has been touted as the next darling of the broadband wireless industry. On June 22, Newbridge announced it had signed a definitive $280 million acquisition agreement for Stanford Telecommunications [STII], a leading supplier of key broadband wireless technology and products. The transaction is subject to the approval of Stanford's shareholders, and is conditional on the sale of other Stanford-owned businesses. The deal is expected to close in November. Problems in the production of Newbridge's core products have forced the company to miss analysts' expectations for profit and revenues estimates for its fourth quarter of fiscal 1999, which ended May 2. This marks the seventh time in the past five years that Newbridge has issued such a statement. StockHouse spoke with CIBC World Markets analyst Todd Coupland about Newbridge's pending Stanford purchase, their track record of consistently missing analyst expectations as well as ongoing speculation as to Newbridge being a takeover target. Interestingly, Mr. Coupland seemed somewhat apprehensive as he was asked a series of hard hitting pointed questions about production and profit expectations. • • • StockHouse: What do you make of the Stanford Telecommunications acquisition? Is this a good deal for Newbridge, or did they pay too much money? Todd Coupland: No, I don't think they paid too much. It is a very strategic deal for them. I think it is going to bode well for them in this market. StockHouse: Is the deal going to close? Todd Coupland: Sure, why wouldn't it? StockHouse: Stanford has a stock price clause on Newbridge [Newbridge shares cannot fall below a mutually agreed upon level of $24]. Stanford still has to sell some of their other operations. Todd Coupland: We are the mergers and acquisitions (M&A) advisor to Stanford and we are also involved in the non-core asset divestiture. I think what the company has been telling people is that there is a good level of interest in the non-core assets. Given what they have seen to date, [this] gives a high degree of confidence that the transaction can all be brought together by the target close date in November. StockHouse: Do they have any expectations on revenues from Stanford? Todd Coupland: Well, Newbridge has very explicit revenues with respect to its broadband access group, which is $1 billion over three years, and Stanford would be a portion of that. StockHouse: Is Newbridge positioning itself to be the broadband leader? Todd Coupland: That is going to be one key growth driver in Newbridge. Broadband access is going to be an important one over the next couple of years. StockHouse: The most common news I hear on Newbridge is that they are consistently unable to convert record numbers of orders into sales because of supply problems. How are they going to deal with these constant shortcomings? Todd Coupland: They put a recovery plan in place after they suffered those manufacturing bottlenecks, so part of that has been implemented, and part of it has yet to be implemented. StockHouse: Doesn't this reflect poorly on management? Todd Coupland: I would think it reflects on management only to a degree. I think that Newbridge has seen an acceleration in its business that has surprised some people within the organization and they weren't ready to deal with it. So they have had to re-tool and put a manufacturing recovery program in place in order to deal with the high growth rate that they are experiencing in their wide area network [WAN] packets. StockHouse: Don't they essentially make one product - switching equipment? Todd Coupland: No. That's not right. They have a series of switches and software that get categorized into the WAN packet business. StockHouse: Yet they can't seem to get these products out in time. What's this saying to investors? Todd Coupland: It's saying they haven't been executing on their manufacturing program. What I am telling you is they put a recovery program in place. StockHouse: I am just wondering if they can fix this problem. That seems to be the news more than anything. I know Bruce Rogers [Operations Executive Director] either resigned or was forced out, but will that alone solve the problem? Todd Coupland: No. There is a whole series of issues that Newbridge has to deal with, with respect to its manufacturing recovery program - dealing with inventory, building and testing and just the manufacturing line itself is part of that, but it is not the only part of it. The way sales people get incentive, the way their SAP system gets implemented, it is a multi-faceted problem that gets dealt with over the next couple of quarters. So it has been dealt with only to a degree up until now. StockHouse: Do you see Newbridge meeting expectations for next quarter? Todd Coupland: I think Newbridge is on track to meet this quarter's expectations. StockHouse: Is Newbridge still a takeover target? Todd Coupland: There has been a lot of merger and acquisition activity in WAN equipment companies and there are still publicly stated M&A strategies by companies who want to acquire, in the area that Newbridge has technology and market share leadership. So you have to believe that Newbridge is on those companies' radar screens. Whether or not a takeover bid materializes for Newbridge, it's hard to say, but they definitely, potentially could be a target. StockHouse: Thanks for your comments.