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

To: EdR who wrote (14318)	11/4/1999 6:52:00 AM
From: Glenn McDougall	Respond to of 18016

That sinking feeling Nothing seems able to halt the Newbridge stock slide By Kevin Bell, Ottawa Sun You can tell a company is in investors' doghouse when even great news fails to stop a stock from sliding. For Newbridge Networks Corp., the great news came yesterday from SBC Communications Inc., which named the suppliers for a massive $6-billion US plan -- called Project Pronto -- to become the U.S.'s single largest broadband network. Newbridge was named one of its six primary suppliers. One analyst said the Kanata firm could pick up 10% of the work -- "this is a significant deal for Newbridge," he said. The bad news: Investors don't seem to care. Newbridge stock continued to slide yesterday, losing $1.19 or 8.4% to close at $21.15 on the TSE, following a 22.7% bellyflop Tuesday after the firm warned its quarterly profit will be half of analysts' expectations. "This deal didn't even stop the selling for a second," the analyst said. And it's no wonder when you consider that analysts are scratching their heads wondering how Newbridge will climb out of the hole it has dug for itself. The stock price is getting so cheap that people are talking takeover again. But as analyst Rob MacLellan of CT Securities points out, nobody will buy Newbridge as long as chairman Terry Matthews, who owns more than 20% of the stock, refuses to budge. "I don't think the odds are zero, but they're pretty close to nil," he said. "People keep forgetting that it doesn't mean a hill of beans if you don't want to be acquired." But without a sale, analysts are just chalking up all the negatives. They include an unexplained drop of sales for its bestselling switch in its number one market and the lack of a new product in the short-term that can boost sales. Newbridge's deal to acquire Stanford Telecommunications Inc. for stock is now in jeopardy. As Newbridge falls, it will likely have to come up with $200 million more in cash or issue a whack of new stock, diluting existing shareholders' equity, MacLellan said. And then there's the morale of employees, who are watching their stock option strike price drift further and further from their grasp. With Cisco Systems virtually across the street, some key defections are possible. Tax-loss selling season is also just around the corner. The 60% stock decline from its high this year means Newbridge is a prime candidate to be jettisoned from portfolios, putting more downward pressure on the stock. So what's the bright side? "That this stock has probably hit the floor," said Patrick Houghton of Sutro & Co. "But I said that yesterday, and the stock is still sinking."