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

To: Glenn McDougall who wrote (14429)	11/10/1999 8:25:00 AM
From: gbh	Read Replies (2) \| Respond to of 18016

November 10, 1999 Newbridge Races to Beat Rivals to Wireless Network By JOEL A. BAGLOLE Staff Reporter of THE WALL STREET JOURNAL OTTAWA -- Newbridge Networks Corp., one of Canada's leading high-technology companies, is betting heavily on a single promising product line to get it back on track in less than 90 days. And the company's new president, Pearse Flynn, has every reason to rush as takeover speculation swirls around the company. Last week, the data-communications equipment maker said earnings for the quarter ended Oct. 31 will fall below analysts' estimates -- the sixth time it has happened in the past 10 quarters. Alan Lutz, Mr. Flynn's predecessor as president and chief operating officer, resigned last week and the company's shares plunged. Newbridge shares jumped 11% on Monday amid takeover rumors, and late Tuesday the shares rose to US$17.625 (16.97 euros), up 12.5 cents, on the New York Stock Exchange. The stock's 52-week high was $39.875 on Jan. 20. Takeover Rumors Abound Alcatel SA, the French telecommunications-equipment producer, declined to comment Tuesday on speculation that it is considering a bid for Newbridge. But other foreign companies may be considering offers, analysts said. Though Newbridge has rebuffed overtures in the past, analysts said its resistance is softening. When asked, Mr. Flynn said: "Is there a plan to sell the company? No. But never say never." At its current stock price, the company is ripe for a takeover, said Brendan Caldwell, director of Caldwell Securities Inc., Toronto. Newbridge's founder and chief executive, Terence Matthews has ordered Mr. Flynn to refocus the company. Mr. Flynn, 36 years old, is counting mainly on the company's wireless broadband telecommunications network, which relies on some of the company's strongest technology. Eliminating the need for traditional copper phone lines, the network will use a transceiver and several receivers to transmit voice, video and data. A Race With Big Competitors But to triumph, the company must beat out competitors such as Cisco Systems Inc., Motorola Inc. and Nortel Networks Corp., which are also racing into the market. Nortel has a competing wireless broadband system in trials now. In October, Cisco and Motorola unveiled an alliance designed to deliver a network to market next year. The potential market is valued at billions of dollars, but if Newbridge is going to win big, it must get its network out before competitors lock up customers, analysts said. The company said it plans to start service trials by the end of the month, and to market the product by the end of January. Newbridge has one clear advantage. Its system relies heavily on the company's own asynchronous transfer mode (ATM) switch, which allows voice, video and data to travel at high speeds across the networks of telecommunications service providers. The Leader in Switches According to Yankee Group, a technology research firm in Boston, Newbridge is the leader in ATM switches and has 25% of the global market. World-wide sales of the devices should reach $1.9 billion this year, up from $1.4 billion last year, Yankee said. But Newbridge faces several hurdles. Its edge in wireless broadband comes from a partnership with Silicon Valley company Stanford Telecommunications Inc. Newbridge, which has a market capitalization of more than $3 billion, has agreed to buy Stanford for $490 million in stock. Stanford shareholders are scheduled to vote on the deal Monday. But Stanford said it will scrap the merger unless Newbridge sweetens its stock offer by Wednesday to offset the decline in the Canadian company's stock price. Newbridge said it is considering plans to improve the offer. In addition, wireless broadband is an unproven technology that has come under fire for malfunctioning in rain and snow, said Robert MacLellan, a technology analyst at CT Securities Inc. in Toronto. Newbridge said 20 telecommunications companies have signed contract commitments to buy its wireless broadband network, and 65 others are negotiating deals. But that doesn't solve Newbridge's immediate problems. Mr. Flynn, who worked himself through university in Ireland as a stand-up comic, said: "Sometimes I think it would be easier being a comedian. The audience is a bit more forgiving."