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

To: Glenn McDougall who wrote (14064)	10/29/1999 6:26:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 18016

Rumours roll over Newbridge buyer By KEVIN BELL, Money Editor Ottawa Sun Newbridge Networks Corp. may have gone out of its way to quash speculation it could soon be up for sale, but observers say a buyer may be what's needed to spark the company. While jitters over a possible profit warning in its second quarter have pushed the stock lower in recent weeks, some analysts say Newbridge investors' ultimate salvation would be to join forces with a larger firm. "I think if they do miss this quarter -- and the market is telling us it will -- I wouldn't be surprised if the company announces they will seek the services of an investment banker, somebody to shop the company around and get the best price," said Brendan Caldwell, vice-president of Caldwell Securities. "I think in the world of enormous telecommunications companies, I'm not sure there is a spot for a firm the size of Newbridge in the long term." At an analysts' conference last month, company president Alan Lutz firmly denied any suggestion that Newbridge is interested in a merger or a sale. But speculation has not died. Rumours swirled around investment circles this week that Newbridge will be hard-pressed to meet expected earnings of 19cents US a share. And that it in turn led some analysts to suggest that a warning, which would be its sixth in 10 quarters, could send the stock tumbling even more. "It could get to $15 or lower, and as it drops we're going to have more and more people saying that the stock is a takeover candidate," said Rob MacLellan of CT Securities. "The best possible end game is for Newbridge to be acquired," he said. "The firm would fill a nice niche for a couple of different players." Paul Sagawa, an analyst with Bernstein & Co., said Newbridge should merge with another firm even if it meets current forecasts. "Newbridge suffers from massive credibility problems," Sagawa said. "Unfortunately, it's going to take chalking up quarter after quarter of strong results ... There is very little enthusiasm about the stock in the U.S."