Pat,
You're slowing down, or I missed a post. Following was of interest.
One does have to wonder whether NN's current market cap is even a small fraction of the sum of the assets.
The JNPR $350M would probably be shown on the books at $10M.
Ian.
+++++++
August 18, 1999
Newbridge's Gain On Juniper Stk Could Finance IP Moves
By BEN DUMMETT
TORONTO -- Newbridge Networks Corp. (NN) has an unrealized gain of more than US$350 million from its stake in Juniper Networks Inc. (JNPR), strengthening Newbridge's ability to finance its Internet-based strategy.
Newbridge's paper gain in Juniper "gives us a lot of flexibility" to make acquisitions to service the explosive growth in Internet traffic, John Lawlor, a Newbridge spokesman, told Dow Jones.
Newbridge holds 1.7 million Juniper shares, for which it paid US$9.7 million. Juniper's current stock price of 217 on Nasdaq values Newbridge's holding at about US$368 million, for a book gain of about US$358 million. Newbridge also had about C$860 million in cash as of the beginning of May, Lawlor said.
These funds could form a key part of Newbridge's development of an Internet protocols (IP) strategy. Some analysts have questioned the ability of Newbridge, Kanata, Ont., to finance possible acquisitions in this sector. Companies that make terabit routers, which are used to guide traffic over the Internet at superfast speeds, have surged in value in recent months.
Juniper, Mountainview, Calif., is one such company. It went public in late June at US$34 a share and is trading at more than six times the IPO price. Also in June, Lucent Technologies Inc. (LU) agreed to acquire Nexabit Networks Inc., a Marlboro, Mass. maker of terabit routers, for US$900 million in stock. As well, Avici Systems Inc., a North Billerica, Mass. terabit router company, ended its distribution alliance with Nortel Networks Corp. (NT), Brampton, Ont., preferring instead to pursue a public offering.
Juniper Stake Not Seen As 'Strategic Investment'
Lawlor hinted that Newbridge could sell its stake in Juniper, saying that it's not a "strategic investment."
Lawlor also confirmed that Newbridge will clarify its IP strategy on Sept. 23 and on another date between now and then. Lawlor wouldn't comment on whether that date might be Aug. 24, when the company releases its results for its fiscal first quarter.
Investors have been growing impatient with Newbridge. The company indicated in February that it would unveil its IP strategy in the weeks ahead, but it has since made no significant revelations.
Newbridge is mainly known for developing high-speed asynchronous transfer mode (ATM) networks to transmit voice and data services. However, more and more traffic is being delivered via networks based on Internet protocols or networks that combine ATM and IP technologies. This heightens the need for Newbridge to come up with a IP-based strategy.
Analysts have said that Newbridge affiliates Ironbridge Networks Inc. and Northchurch Communications Inc., both Boston-area start-ups, will likely form an important part of Newbridge's IP strategy.
Northchurch has developed router technology that works at the edge of either an ATM or IP network, to give a carrier's customers access to data, voice, video and e-commerce services. Ironbrige makes high-speed routers.
Newbridge, through direct and indirect holdings, owns about 60% of Ironbridge and Northchurch. Lawlor declined to comment on whether Newbridge planned to acquire the minority interests in either or both of these affiliates. However, he said they are "key" parts of the company's growth strategy.
A spokesman at Ironbridge said that the company's strategy has been, and continues to be, to hold an initial public offering sometime in the future to fuel growth.
By waiting so long to unveil its IP strategy, some analysts have been concerned that Ironbridge, in particular, could be becoming too pricey for Newbridge.
Indeed, one analyst, who asked not to be identified, said Newbridge doesn't necessarily have sufficient funds to buy out Ironbridge, even if it realizes the Juniper gain.
Lawlor also said Newbridge is developing new high-speed switching gear that will offer users IP and ATM functionality. For instance, in the fourth quarter of 1999, Newbridge customers will start testing a new Newbridge switch with capacity to handle up to 320 billion bits of data. Then, in the first quarter of 2000, Newbridge customers are expected to start testing the company's new 320 gigabit switch, which users can scale up to terabit capacity, or a trillon bits of data a second.
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