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

To: Tunica Albuginea who wrote (17174)	2/18/2000 6:22:00 AM
From: Tom Drolet	Respond to of 18016

Tunica: This posted on the Wall Street Journal Internet Addition(WSJIA) about 4:am. Also the WSJIA contents in the form of a general 30 sec news piece is a re-ocurring news bite on CNBC this early am--5am, 5:30am, 6am. Tom D. February 18, 2000 France's Alcatel Is Holding Talks On Acquiring Canada's Newbridge By ANITA RAGHAVAN, JOEL BAGLOLE and KEVIN J. DELANEY Staff Reporters of THE WALL STREET JOURNAL France's Alcatel SA is in talks to buy Canada's Newbridge Networks Corp. for more than $6.5 billion in stock, people familiar with situation said. A deal could be announced as early next week, they said. A purchase of Newbridge would further Alcatel's strategy of bringing its technology product offerings up to date through acquisitions. Last year, Alcatel bought U.S. data networking companies Xylan Corp., Assured Access Technology Inc. and Internet Devices Inc. as part of its effort to keep pace with networking giants such as Cisco Systems Inc. and Lucent Techonologies Inc., which have lured some of Alcatel's customers away. Although precise details of the deal couldn't be learned Thursday night, analysts said Newbridge executives have told them a deal could be announced as early as late next week after it announces better-than-expected fiscal third-quarter results. According to the consensus of analysts surveyed by First Call/Thomson Financial, Newbridge is expected next Tuesday to report earnings of 11 U.S. cents a share for the quarter ended Jan. 31. A year earlier, it earned, including nonrecurring gains, 120.1 million Canadian dollars ($82.6 million), or 66 Canadian cents (43 U.S. cents) a diluted share. In 4 p.m. New York Stock Exchange composite trading Thursday, Newbridge shares rose 56.25 cents to $35.125, giving it a market capitalization of around $6.4 billion. A Newbridge spokesman declined to comment on the talks. "It remains speculation," said an Alcatel spokesman. "We have no comment on speculation and rumors," he said. Alcatel Acquisition Binge Alcatel has been on an acquisition binge in recent years in an attempt to transform itself from an old-style maker of telecommunications equipment to a modern data-networking company. Newbridge, meantime, underwent a substantial restructuring this past quarter, laying off 10% of its work force, or about 600 employees, and installing Pearse Flynn as the new president after the company failed to meet expectations in six of the last 10 quarters. For the past year and a half, Newbridge has tried to boost its market share in the U.S. to compete better against rivals Cisco, Lucent and Nortel Networks Corp., though it hasn't been very successful. Indeed, its poor performance last quarter was blamed on its failure to penetrate the U.S. market. Newbridge is based in Kanata, Ontario, a suburb of Ottawa. Benefits for Both Sides Paul Silverstein, senior analyst at Robertson, Stephens & Co., said that Alcatel will gain talented engineers, great products and a strong customer base by acquiring Newbridge. Newbridge, in turn, will benefit from Alcatel's solid management team. Newbridge has been viewed as having suffered from poor management. Alcatel's latest move continues the company's foray into the crucial U.S. market. The U.S. is now its biggest market, contributing more than 20% of sales. That's a change from just a few years ago, when Alcatel sold most of its products in France. In the summer of 1998, Alcatel surprised investors by acquiring DSC, one of the biggest providers of telephone equipment to the U.S. regional phone companies, for $4 billion. Alcatel traditionally has been strong in supplying transmission equipment to long-distance carriers. The DSC deal helped the company significantly broaden its footprint in the U.S. Companies such as Alcatel are being driven to buy telecommunications-equipment makers such as Newbridge to enable them to exploit the Internet and telecommunications markets. Newbridge builds switches that allow voice, video and data to travel over networks at high speeds. Write to Anita Raghavan at anita.raghavan@wsj.com, Joel Baglole at joel.baglole@dowjones.com and Kevin J. Delaney at kevin.delaney@wsj.com