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

To: Glenn McDougall who wrote (14611)	11/16/1999 7:51:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 18016

Turmoil swirls around Newbridge Jill Vardy Financial Post OTTAWA - There was fresh evidence of management turmoil at Newbridge Networks Corp. yesterday as rumours continued to fly about who is interested in buying the company. Newbridge officials confirmed Brian Jervis, executive vice-president of its switching products division, left the firm around the same time that Alan Lutz, Newbridge's former president, was fired two weeks ago. Ed O'Goneck has been appointed to replace him. Analysts worry that Newbridge is losing ground to Lucent Technologies Inc. in the crucial U.S. market for asynchronous transfer mode (ATM) equipment. ATM equipment now makes up the bulk of Newbridge's revenue. Lucent's top-speed switch is faster that the current one offered by Newbridge. Mr. Jervis was appointed by Mr. Lutz in October, 1998, to replace Scott Marshall, a long-time Newbridge employee and friend of Terence Matthews, Newbridge's chairman and chief executive. Mr. Marshall's firing was seen by Newbridge observers as evidence Mr. Matthews had handed the reins of the company he founded over to Mr. Lutz to fix its problems. John Lawlor, Newbridge's vice-president of corporate communications, said yesterday he was reluctant to talk about Mr. Jervis' departure or about rumours of a possible takeover that have buffeted the stock in recent days. Yesterday it was down $1.90 at $29.50. But there was no shortage of speculation outside the company about its future as an independent telecommunications equipment company. One of those fingered as a possible Newbridge buyer, Alcatel SA of France, put those rumours to rest yesterday. Jozef Cornu, executive assistant to Serge Tchuruk, Alcatel's chairman, told reporters Alcatel is not planning to offer to buy all or part of Newbridge. "For the moment, there is nothing," Mr. Cornu said while attending a conference in New York. "We aren't formulating any proposal." Sweden's LM Ericsson Telephone Co. was also playing down rumours it's interested in buying Newbridge. Lars Ostland, Ericsson's press manager, repeated the official response that it is the company's policy not to comment on market rumours. But he suggested Newbridge is too big a company to fit into Ericsson's acquisition plans. "We have an acquisition strategy focused on small to medium-sized companies. It's difficult to give you an exact range, but I would definitely consider Newbridge to be bigger than what we'd call a medium-sized company," Mr. Ostland said. For every name dropped from the list of possible Newbridge buyers, two get added in market speculation that some analysts have dubbed a "soap opera" in the telecommunications sector. Yesterday alone, rumours abounded that Cisco Systems Inc., Tellabs Inc., Nokia Oyj of Finland and Equant N.V. of the Netherlands could be mounting bids. None of the companies offered comment. Newbridge warned on Nov. 2 that profit in the second quarter ended Oct. 31 would be just 8½ to 10½ a share -- about half of analysts' expectations -- because of flat sales of its equipment. Final numbers for the second quarter will be unveiled on Thursday, after a two-day meeting of Newbridge's board to evaluate a strategic action plan. Board members have been told it's possible a takeover bid may have to be considered. Meanwhile, the ATM problem should be remedied early next year when Newbridge's newest 50-gigabit ATM switch is commercially available. Mr. Lawlor said the lack of a 50-gigabit switch is the "single greatest factor for the stall in our revenues" during Newbridge's second quarter. He said there has been "no meaningful slippage" in the timetable to get that switch out to customers.