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

To: Goldbug Guru who wrote (14200)	11/2/1999 1:34:00 PM
From: Doug	Read Replies (1) \| Respond to of 18016

Please see the P/S of comparable stocks. CSCO 19.6; Tellelabs 12.2 ; Ciena 9.8 ; Lu 4.8; NT 3.8; COMS 1.9 ; NN 1.7

To: Goldbug Guru who wrote (14200)	11/2/1999 1:41:00 PM
From: Mr.Fun	Read Replies (5) \| Respond to of 18016

Some observations: 1. Things are likely to get worse before they get better. There is a lifecycle to WAN packet switch products. A look back at Cascade's history is instructive - Cascade signed a long list of FR customers back in 1995, showed extraordinary growth in 1996, collapsed in early 1997 when the original contracts reached full deployment (12-24 months after signing), was acquired at a bargain price by Ascend in Spring 97, brought out its lower speed CBX500 ATM switch in early 97, introduced the GX550 core ATM switch in fall 97', and started showing extraordinary growth in early 98. (forgive me if i'm off a month or two) NN has been living off of the anchor tenant customers signed in 1997 and is now about where Cascade was in the product life cycle around March of 97. Even TM does not expect the 50GBPS switch to deliver strong revenues for 2-3 quarters as per cc. 2. It is not a foregone conclusion that the 50/450Gbps switches will be a success. a) product delivery schedules slip all of the time, and there are more than a few issues to deal with on the table at NN that could cause delays. b) The competition is considerably stronger than in the early days of the 36170's success. Lucent, Nortel and Cisco bring resources to the selling process that will be difficult for a company the size of NN to deal with, not to mention $Billions in R&D budgets. c) TM is right that ATM is finding its way into the core of telco networks, but curiously I believe it works to NN's disadvantage. There is strong scuttlebutt that LU and NT are battling for the ATM based backbone at SBC, a traditional NN customer. SBC is unlikely to entrust the mission critical core of its network to NN, when NN is reeling financially and may be sold to a variety of possible players. This logic will play out in all of NN's key accounts - already DT has started deploying 100's of Lucent GX550s to support its national DSL roll out. 3) Even though a buy out is probably the best answer, TM is a formidable obstacle to any deal getting done. TM owns almost 25% of the company. TM owns all of the land and all of the buildings. TM owns a bigger stake than NN in the affiliates. More than one would be acquiror that I have talked to has expressed reservations about a NN acquisition due to TM (Tellabs said at a conference that it would not consider NN unless TM was completely uninvolved) TM is very, very stubborn, and could drag down all of its shareholders. 4) Most institutional shareholders were already disgusted at NN and its overpromise, underdeliver record before this. FIDO was publicly embarrassed by buying into NN management's shameless stock pumping and then having to bail at a loss. Many bridges have been burned and to say this company has lost credibility with the street is an enormous understatement. 5) On a downside scenario, the best analogy I can think of is Shiva - a company that went from 80 times earnings to the garbage heap in two years, acquired for $6 a share by Intel never to be heard from again. My advice: Sell now. Don't think about buying until June and then only if actual 50Gbps contracts begin shipping. I have never been short this stock - I'm not allowed to - and I am genuinely sorry that so many on this thread have been hurt financially by this debacle. Rather than turning your anger on those that do not share optimistic views of NN, I suggest you turn those emotions on Terry Matthews who has not been looking out for your best interests.