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

To: pat mudge who wrote (13036)	8/26/1999 2:29:00 AM
From: Michael M	Read Replies (1) \| Respond to of 18016

Pat -- using Cerent as "comp sale," NN would be steal of the century at $20 billion. Actually, getting there on our own is "thinkable." Been on the good side of lots of NN encounters past four or five years -- missed some nice runs too -- think I'll stay aboard for a while this time. Any day now, this looney duckling could start looking like smart money. I love momentum! Thanks for keeping the lazier element so well informed. Mike

To: pat mudge who wrote (13036)	8/26/1999 7:27:00 AM
From: gbh	Read Replies (2) \| Respond to of 18016

Who is most impacted by Cerent's products? Does it compete with anything NN has, or would Tellabs or DSC(ALA) be more threatened? Pat, I'm still doing some research, but I believe the Cerent product allows for the complete replacement of the Digital Cross Connect (DCC/DCS) and Add/Drop Mux layers needed for the conversion of facilities from short haul (DS0/DS1/T1/E1) to long haul (T3/E3 up to OC192 and higher). Remember, before anything like IP or ATM data can be moved at the higher OC rates on a Sonet or SDH ring, an addition of the Sonet (or SDH, in Europe) overhead must be incurred to gain the benefits of of ring transports (Sonet or SDH rings). This is transport layer. This product would come into direct competition with LU/TLAB/ALA and from the specs, and customer list, appears to leapfrog anything these other guys are offering. $7B sounds excessive, but imagine this little start-up has almost 100 customers. Put this thing in the hands of the CSCO sales force, and look out above... gary

To: pat mudge who wrote (13036)	8/26/1999 7:39:00 AM
From: Glenn McDougall	Respond to of 18016

Newbridge to pay $350M for Net firms firms Purchases kick off company's plan for expanding its product lines James Bagnall The Ottawa Citizen In what promises to be the first of several Internet-related transactions, Newbridge Networks Corp. revealed yesterday that it will pay $350 million over the next two years to acquire the 70-per-cent stake it does not already own in Kanata-based TimeStep Corp. and Northchurch Communications Inc. of Andover, Massachusetts. TimeStep, an encryption expert, and Northchurch, which makes specialized data switches known as routers, will play key roles in helping Newbridge become a credible player in the world of Internet Protocol (IP) technology. The IP strategy is meant to complement Newbridge's clear strength in a separate, voice-friendly data communications technology known as asynchronous transfer mode, or ATM. "This is not really about technology," said Jim Arseneault, the executive in charge of the Newbridge's Internet strategy. "What we want to do is give Internet service providers a way of generating extra revenues." One way of accomplishing this is to build products that will allow Internet service providers to develop premium services and charge customers extra for them. For example, many business customers are interested in receiving "streaming video" and guaranteed levels of service (in other words, no Web congestion) on networks that offer protection against hackers. Eight-year old TimeStep -- one of the first firms in which Newbridge took a direct equity stake -- is one of the leading providers of Internet-based virtual private networks. These are software-driven networks that make extensive use of the Internet. Because they are encrypted, individual firms can use them for sending sensitive corporate information between branch offices or to and from suppliers. As a bonus, many of TimeStep's customers tend to be the IP specialists within large organizations -- people that Newbridge in the past has tended to pass by. Newbridge hopes to be able to able to persuade many of these customers to buy its traditional equipment as well. But TimeStep itself will now be responsible for driving up a good portion of Newbridge's IP-related growth. "This deal is really important for us," said Tim Hember, TimeStep's 39-year-old chief executive and co-founder. "We're going head-to-head in this market globally against Nortel Networks Corp., but we don't have their infrastructure. Newbridge's resources will help us." According to a survey this year by International Data Corp., a U.S. consulting firm, TimeStep held a 12-per- cent share in the global market for its niche, second only to Nortel's 16-per-cent share. Newbridge will pay about $115 million to acquire TimeStep's remaining equity, putting an implied market value on the company of roughly $164 million. TimeStep's 135 employees, mostly based in Kanata, control about 15 per cent of the firm. They will be able gradually to exchange their shares for cash over the next two years provided they meet conditions. Northchurch was accorded a higher valuation, despite the fact it has yet to generate significant revenues. Newbridge will pay about $235 million for the 70-per-cent stake it doesn't already hold. TimeStep, which has sold its technology to major customers such as the Big Three auto manufacturers and GTE Corp. of Stamford, Connecticut, had revenues of $5 million to $10 million in its most recent quarter. Northchurch is expected to introduce its products later this fall. Combined, the two firms are being counted on to deliver substantial revenue growth next year. But for Newbridge's current fiscal year, which ends April 30, the two firms will cut Newbridge's earnings by an estimated six cents U.S. per share -- with roughly half that reduction occurring in the second fiscal quarter ending Oct. 31. Newbridge chief operating officer Alan Lutz also suggested other acquisitions might be in store. "We are not precluding acquiring more affiliates if that makes sense," he said yesterday. Among the more likely candidates: B.C.-based Abatis Systems Corp. and Bridgewater Systems Corp. of Kanata.