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

To: Ian@SI who wrote (14423)	11/10/1999 7:19:00 AM
From: Glenn McDougall	Respond to of 18016

Buying Newbridge could make French telecom firm major player in North America Karyn Standen The Ottawa Citizen; With files from Dow Jones News Alcatel SA of France and L.M. Ericsson Telephone Co. Inc. of Sweden recently made offers to acquire Newbridge Networks Corp., according to a source close to Newbridge, but one industry analyst said Alcatel, a major telecommunications equipment maker, is the "most credible" candidate to take over the Kanata networking company. "It would be a smart move for Alcatel," said Tom Nolle, president of CIMI Group Corp. of Voorhees, New Jersey. Alcatel, he said, needs to boost its capability in asynchronous transfer mode (ATM) switching technology, primarily to supply local exchange carriers looking to build broadband local access networks. These carriers are likely to be the "largest spenders on ATM technology" in the U.S. over the next five years, giving the ATM equipment market a total value of $30 billion to $50 billion U.S. over this period. "If Alcatel could acquire Newbridge, it would have ATM switching technology, (meaning) it might be able to keep other switch vendors, such as Lucent or Nortel, out of deals," he said. "And there would be enough money in this deal to set up Alcatel as a major player in the North American market, on the basis of the revenues they could expect from selling switches to the local exchange carriers." Alcatel was tapped as a leading contender for Newbridge's hand after Dan Dorfman, a U.S. columnist, wrote on Monday that the French company was interested in acquiring Newbridge for about $24 U.S. a share. Spokesmen for Newbridge and Alcatel's U.S. operations were not available for comment yesterday. Ericsson, the wireless communications giant, was rumoured to have offered to buy Newbridge for about $30 a share earlier this year. Newbridge denied the speculation at the time. Now, however, Ericsson appears to be discounting a possible takeover. In an Oct. 27 conference call discussing the company's third quarter numbers, Ericsson chief executive Lars Ramqvist said the company's "string of pearls" strategy would continue, adding that "there is no big acquisition in the pipeline." The so-called "string of pearls" strategy centres on acquiring smaller data communications specialists, he said. Analysts say renewed takeover speculation comes as no surprise, especially in light of Newbridge's recent warning that its second-quarter earnings will fall short of expectations --Ò the sixth such warning in the past nine quarters. Even so, industry watchers say the rumours remain just that. "If you look at (Newbridge) and its assets, there's reason to believe somebody would be interested," said analyst Paul Silverstein of BancBoston Robertson Stephens. He said he has heard of no developments regarding a potential Newbridge takeover. Along with Alcatel and Ericsson, possible Newbridge buyers include Marconi PLC of the U.K., Tellabs Inc. of Illinois, Nokia S.A. of Finland and Fujitsu Ltd. of Japan. Newbridge founder and chief executive Terence Matthews is viewed as a significant block to any takeover because of his 22-per-cent stake in the company. Some analysts contend Mr. Matthews would consider the rumoured $24-a-share bid too low. However, Mr. Nolle said Newbridge is running out of time, and that Mr. Matthews might have no other choice. "They don't have the resources to match a big player like a Lucent or a Nortel or a Cisco in advancing their product on multiple fronts, so they can support several possible market evolutions." Asked how long Newbridge could survive as an independent company, he replied, "They've got about nine to 12 months." On a separate note, Newbridge spokesman John Lawlor said the company expects to complete renegotiation of its acquisition of Stanford Telecommunications Inc. of Sunnyvale, California, in the next couple of days. Newbridge must alter the $490-million all-stock purchase because its stock price averaged less than the agreed-upon $24 between Oct. 26 and Nov. 8. Newbridge shares closed up $1.90 at $25.90 yesterday on the Toronto Stock Exchange. The stock fell $1é16 to close at $17 7é16 on the New York Stock Exchange. Alcatel shares touched a 52-week high of $33 7é16 yesterday in New York. The stock ended the day at $32 5é8, up $1é16.