Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Tunica Albuginea who wrote (17202)	2/18/2000 10:18:00 AM
From: Tunica Albuginea	Read Replies (1) \| Respond to of 18016

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