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 : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (10796)	11/25/1997 9:09:00 PM
From: Mang Cheng	Read Replies (3) \| Respond to of 45548

Wigglesworth, With NN trying to exit the LAN market, I think it should make NN a more loyal partner with coms . ******************************************************************* "Newbridge mulls sale of UB unit" 20:10 Tuesday, November 25, 1997 THE GLOBE AND MAIL News Wire BY LAWRENCE SURTEES Telecommunications Reporter Newbridge Networks Corp. may sell the troubled UB Networks division, which has been a drag on revenue and profit for three consecutive quarters, says Ken Wigglesworth,** chief financial officer. "We're looking at strategic alternatives and considering numerous options," which include the possible sale of the business that was acquired less than a year ago, Mr. Wigglesworth told reporters. He spoke during a conference call on Tuesday to discuss Newbridge's second-quarter financial results. A selloff "is within the zone of possibilities," he said, adding that Newbridge management expects to make a decision on what to do with the UB division by the end of the fiscal 1998 third-quarter on Feb. 1. And that raises the prospect of a further penalty to future earnings at the Kanata, Ont., communications network equipment maker. A shutdown of part of that division or the sale of the unit could lead to a onetime charge in a subsequent quarter, Mike Urlocker, a telecommunications analyst at Toronto-based Gordon Capital Corp., predicted. Asked whether the $100-million (U.S.) acquisition of UB Networks from Tandem Computers Inc. in December, 1996, was a mistake, Mr. Wigglesworth said Newbridge "is not pleased with the declining revenues there." The UB division accounts for only a portion of Newbridge's total revenue. But its $25-million (Canadian) drop in sales for the second quarter ended Nov. 2 is largely responsible for Newbridge's stalled revenue growth from the preceding quarter of this fiscal year, the company said earlier this month. And costs associated with that acquisition have also dragged profit down from a year ago. The company's results for the second quarter were in line with a warning issued to investors on Nov. 4 that profit would be off from the first quarter and that sales would be flat. For the second quarter just ended, Newbridge posted profit of $58-million or 33 cents a share, compared with $62.8-million or 37 cents a year earlier. Revenue was $432.2-million for the quarter just ended, up from $316.1-million a year ago. Newbridge shares sank on Tuesday, even though the financial results were released after North American stock exchanges had closed. Newbridge's share price lost $2.15 on the Toronto Stock Exchange on Tuesday to close at $61.65. Volume was heavy, with more than 777,000 shares traded. The decline was paltry, however, compared with the $14.80 drop that Newbridge suffered on the TSE when it issued its second-quarter warning earlier this month. Numerous Newbridge insiders also sold shares and options throughout the late summer and early fall, including Newbridge chairman and founder Terence Matthews. Mr. Matthews raised $16.9-million from the sale of 200,000 shares from Sept. 18 to Oct. 2, according to a recent Ontario Securities Commission bulletin. Mr. Matthews still holds almost 1.2 million shares. Still, Newbridge is keen to point to its record sales and order backlog in the most recent quarter as signs of strong growth in its core business in the so-called "wide-area-network" market. Sales of its high-speed computerized asynchronous transfer mode (ATM) switches account for almost half of its sales -- a fivefold increase from a year ago. That growth was responsible for boosting revenue for the six months ended Nov. 2 to $866.9-million from $602.1-million last year. Profit was $122.3-million or 70 cents a share for the recent period, compared with $123.6-million or 73 cents in 1996. Faced with increased competition in the ATM market and stalled sales growth in Newbridge's oldest product line -- multiplexers that boost the capacity of an existing phone line -- analysts caution that it's imperative for Newbridge to tackle the problem at UB Networks. Newbridge acquired the company from Tandem in a bid to diversify and to assault the growing market for corporate "local-area" networks (or LANs). "We still intend to tackle that market, but after this quarter, we've decided it's appropriate to consider alternatives for the LAN business," Mr. Wigglesworth said. c THE GLOBE AND MAIL News Wire - 1997