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

To: Tunica Albuginea who wrote (2801)	1/23/1998 4:37:00 AM
From: Johnny Canuck	Respond to of 18016

Canadian Financial Post: Friday, January 23, 1998 Newbridge takes another hit By JILL VARDY Technology Reporter The Financial Post Shares in Newbridge Networks Corp. fell yesterday after a leading analyst downgraded his rating on the stock. SBC Warburg, Dillon Read Inc. analyst Robert MacLellan cut his recommendation to "neutral" from "buy" on the belief Newbridge would not match analysts' expectations for its quarterly earnings. "We have a firm belief the company's earnings will come in below the consensus number [of US25› a share]," MacLellan said. He had been predicting net income of US26› a share but has cut his earnings estimate to US23›, which would represent no earnings growth over the second quarter. Newbridge's shares (NNC/TSE, NN/NYSE) tumbled $3.10 to $41.60 in Toronto and US$2 5/16 to US$28 9/16 in New York. MacLellan, who has long been positive on Newbridge stock, said a cyclical weakness in sales of time-division multiplexing (TDM) equipment, used as the backbone in most of the world's public and private telecommunications networks, will reduce the company's revenue in the third quarter, which ends Feb 1. He said Newbridge's TDM business carries high margins, "so if there's a sales shortfall it flows right to the bottom line." Newbridge's TDM sales tend to be erratic from quarter to quarter, MacLellan noted. "In the case of the current quarter, a review of our earlier growth expectations... combined with industry sources have led us to cut our expectations for TDM sales growth sequentially to flat or slightly downward," he wrote in a report. He expects Newbridge's revenue to fall to $430 million, down from $432 million in its second quarter. Newbridge will release its quarterly results on Feb. 24. Newbridge stock has been shaken over the past two months by a number of factors, including fears about its exposure to troubled Asian markets, which have prompted some investors to abandon the stock, despite Newbridge assurances that most of its Asian business is in China and Australia - two countries relatively unscathed by the Asian flu. Analysts say investor jitters will continue until Newbridge unveils plans next month for its troubled Ungermann-Bass Networks division, which makes switching equipment for local area data networks. Newbridge laid off 280 UB Networks employees and promised more action to stem losses after expected UB sales failed to materialize. MacLellan said he expects a possible sale or transfer of UB assets to 3Com Corp., the U.S.-based equipment manufacturer that is partnered with Newbridge and Siemens AG. The market is also waiting to see how Newbridge fares in a spate of tenders for network equipment that will be awarded by major phone companies in the next few months. A couple of winning contracts could enhance already strong sales of Newbridge's asynchronous transfer mode (ATM) equipment, which phone companies are using to build high-speed networks to carry voice, video and data traffic.