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

To: Ian@SI who wrote (12825)	8/17/1999 11:06:00 PM
From: New Economy	Respond to of 18016

Newbridge Pre-Earnings Silence Is Golden By Susan Taylor OTTAWA (Reuters) - No news is good news for Newbridge Networks Corp. (NYSE:NN - news) investors weary from a string of previous profit warnings as the networking firm prepares to release first-quarter results on August 24. Newbridge, which closed its books on the results 13 days ago, has issued profit warnings in five of its eight last quarters. The Ottawa-area firm is unlikely to miss current projections, analysts suggest, after management twice guided down analysts' expectations for this quarter. The consensus from 16 analysts polled by IBES International is 16 cents per share, matched by the consensus from 17 analysts polled by First Call/Thomson Financial. ''I feel pretty confident that they'll be able to make the numbers,'' said Paul Sagawa, telecommunications equipment analyst at Sanford C. Bernstein in New York. ''The consensus number is not particularly onerous.'' The digital networking gear firm said in a conference call with analysts on June 1 to discuss its fourth quarter that it expected to miss first-quarter estimates of 19 cents per share by a few cents. Newbridge missed fourth-quarter estimates because production problems meant it could not meet orders for its switches. That indicates the company entered its first quarter with healthy order bookings. ''If there's any quarter they could meet, it's this quarter,'' said Patrick Houghton, analyst at Sutro & Co. in San Francisco. ''I think they'll make the numbers.'' Still considered a company in the penalty box, Newbridge is dubbed a show-me firm by analysts who want to see a string of results that fall bang on expectations. Missing estimates again would dig Newbridge a ''deeper hole,'' said one analyst who asked not to be named. ''It's quite likely that they're not going to disappoint because traditionally they have pre-released when there's a suggestion they're going to disappoint,'' the analyst said. ''That doesn't necessarily mean that people will embrace with sweetness and light the whole situation. I think it's very much a show-me situation.'' Still, there is no guarantee that Newbridge won't pre-announce or make consensus estimates. ''I've seen firms pre-announce when they were light a penny. I've seen firms not pre-announce when they came in a third below what they were supposed to,'' said Rob MacLellan, analyst at CT Securities in Toronto. ''In all likelihood it (silence) does imply they've made their number. However it's not carved in stone because what is materially different is very much open to a given company's management interpretation.'' Analysts will also watch the results to see if the growth rate is picking up pace. Estimates for fiscal 2000 of $1.40 per share have dropped down to the 95 cent range. ''Not pre-announcing or making their numbers isn't that important from the point of view of the stock price and the company's future,'' MacLellan said. ''What's going to be important, if they make the number, is going to be their outlook and guidance and confidence in being able to grow back to levels we were expecting a year ago for this year.'' Management said in its last conference call that it expected to meet projections for 23 cents a share in its third quarter but could beat fourth quarter expectations of 29 cents per share by 5 cents. ''If they have to re-set expectations again, even if they make the numbers, the stock is going to be flat to down slightly,'' Houghton said. Newbridge stock gained 50 Canadian cents to close at C$38.50 Friday afternoon on the Toronto Stock Exchange in light trade. In New York, the issue was at one point up 25 cents to $26, closing at $25.94