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

To: zbyslaw owczarczyk who wrote (14649)	11/18/1999 8:01:00 AM
From: Glenn McDougall	Read Replies (2) \| Respond to of 18016

Newbridge set to cut costs, abandon products Strategic action plan: Uncertainty hangs over possible takeover bids Jill Vardy Financial Post OTTAWA - Newbridge Networks Corp. is likely to announce today that it is cutting costs, abandoning unprofitable product lines and customers, and redoubling its sales efforts to attract North American telecommunications companies. But it's less clear if the firm will tell the market the one thing it wants to hear -- that takeover bids are welcome. Terry Matthews, Newbridge's chairman and chief executive, and Pearse Flynn, the new president, will unveil a strategic action plan this afternoon following a two-day meeting of the board. Newbridge staff will be the first to see the plan. All 3,300 Kanata employees are being taken by bus to the Corel Centre, near Newbridge's corporate headquarters, for speeches by Mr. Matthews and Mr. Flynn. Speculation is rampant among the staff that the company will announce it is willing to consider takeover bids. However, senior officials are downplaying rumours that the board has been shown a takeover offer or an expression of interest. John Lawlor, Newbridge's vice-president of corporate relations, said the board met to approve the plan and the official second-quarter results, which will also be released today. The company warned on Nov. 2 that its net income for the quarter ended Oct. 31 was about 8½ to 10½ (US) a share, half analysts' expectations. Mr. Lawlor said the action plan was begun in late August and was not thrown off course by the earnings warning -- the sixth in Newbridge's last 10 quarters. "We've put a lot of work into this action plan and come up with a solid strategic plan. It would have been a mistake for us to make a right turn because we had a preanouncement on Nov. 2," he said. The resulting freefall in Newbridge's stock has upped speculation the company might not survive without a larger corporate equity partner. Analysts say Newbridge executives had better show a willingness to consider the possibility of a takeover. "The consensus is that the firm, while it's got a lot of value in its market position and technology, might be better off in the hands of a large player. People are going to be looking for some statement of recognition of that and a willingness to consider that option," said Jim Kedersha, technology analyst at SG Cowen Securities Corp. Mr. Kedersha said there have been "hints" the company is opening to that possibility. "But they haven't really said anything to confirm that," he added. The lack of such a hint would be punished by the markets tomorrow, he suggested. "If the Newbridge executives come out and say, 'We can tweak it and make it work by ourselves,' people aren't going to like that," he predicted. Newbridge is widely expected to shut down production of some of its older and less profitable product lines, narrowing its focus to the few products selling well or that have strong market potential. The company will also shift its entire focus, observers say, to serving customers in the carrier market -- those who are building large public telecommunications networks. Layoffs and senior management changes are also considered part of the restructuring plan. Meanwhile, Michael Birck, Tellabs Inc.'s CEO, confirmed yesterday the company held preliminary talks about acquiring Newbridge last March. Tellabs made three other acquisitions this year. Newbridge management was considered hostile to a takeover offer last spring.