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

To: jkb who wrote (2671)	1/8/1998 4:34:00 PM
From: Barron Von Hymen	Read Replies (1) \| Respond to of 18016

Never saw this before. Where's this news item from?

To: jkb who wrote (2671)	1/8/1998 4:46:00 PM
From: Taylor Caruthers	Respond to of 18016

This stock has been absolutely hammered the past few days. The stock really needs to hold the $32 price level or it will break a double bottom. Here is some research from DLJ dated November 6" NEWBRIDGE NETWORKS Adjusting Estimates Again After Management Input. Earnings Per Share Old New P/E Ratios ÿÿ(FY:Apr) 1999E $1.35 $1.55 31.8ÿ 1998E 1.05ÿ 46.9ÿ 1997A 1.06 ÿ46.5 Rating: BUY Change: None 12-Mo. Target: $60 Following a discussion with Newbridge management on our earnings estimates following the company's pre-announcement we are raising our earnings estimate for FY99 from $1.35 to $1.55. Our revenue assumptions which we review below remain intact. While our revenue forecast is slightly below management's guidance we are comfortable with our assumptions by product line. We were too conservative in our profitability assumptions however. The gross margin impact from the miss was not as bad as we anticipated, and we are now modeling more or less flat gross margin for the next six quarters. Also, the company believes it can significantly drive down operating expenses as a percent of revenue from 44%, its current level,to 36% over two or three quarters. Looking forward on revenue, we are making the most drastic changes to our assumptions for the LAN segment of the company's business (UB/VIVID) which suffered from declines in the shared media hub business as well as product delays on a new switching product. We are leaving unchanged our view that the company can grow the WAN packet business at 40% plus. Overall, we see Newbridge growing its revenue in FY99 about 25%. As we model these assumptions for Newbridge we arrive at our new earnings estimates of $1.05 for FY98 and $1.55 for FY99. We are maintaining our Buy rating on the company as we believe it remains a growth story, and would point out that valuation on our"second pass" numbers is now fairly reasonable. The stock is trading at 30 times our FY99 estimate with the prospect of 40% plus earnings growth in that year.