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Newbridge Networks Announces Preliminary Estimates of Third Quarter Fiscal
1998
PR Newswire - February 02, 1998 18:27
NNC. NN %CPR %ERN V%PRN P%PRN
KANATA, Ont., Feb. 2 /CNW-PRN/ - Newbridge Networks Corporation today
announced preliminary estimates of financial results for the third quarter of
fiscal year 1998, which ended February 1, 1998. Revenue for the third quarter
is expected to be approximately $360 million, compared with revenue of $333
million for the third quarter of fiscal 1997. Revenue for the first nine
months of fiscal 1998 is expected to be approximately $1,227 million, an
increase of more than 30% over the comparable period for the prior fiscal
year. Excluding one-time charges and gains, pro forma fully diluted earnings
per share for the quarter are expected to be 10 cents, in accordance with
Canadian GAAP. Fully diluted earnings per share on a pro forma basis, in U.S.
currency, calculated in accordance with U.S. GAAP, and translated at the
average exchange rate for the quarter of 0.7006, as reported by the Federal
Reserve Bank of New York, are expected to be 7 cents.
One time gains and charges in the quarter are estimated to be: 1) a gain
of $50 million before income tax, associated with the disposition of the
Company's equity position in Broadband Networks Inc.; 2) amortization of $26
million under Canadian GAAP related to research and development in process
associated with the acquisition of Radnet Ltd., which was jointly acquired
with Siemens AG during the quarter; 3) a charge for estimated restructuring
costs related to the Company's Enterprise LAN Distribution business relating
to the former UB Networks. The restructuring charge will include severance
and facilities closure costs, a write-down of inventory, deferred tax assets
and other assets and write-off of goodwill. Further details on this item will
be provided when the Company releases final results for the quarter on
February 24, 1998.
The decline in revenue from the previous quarter results principally from
a significant sequential decline in revenue for time division multiplexer
(TDM) systems. TDM revenues in the quarter were affected by the increasing
fluctuations or variations in quarterly revenues characteristic of this
business as a growing proportion of the TDM business comes from markets
outside North America. This characteristic was exhibited across the Company's
three largest international markets for TDM equipment: Europe, Asia and Latin
America. TDM revenue was also affected by the volatility in general economic
conditions in certain countries in Latin America and Asia. TDM revenue is
expected to improve in the fourth quarter of fiscal 1998.
The cumulative sales of Newbridge(R) 3600 and 3645 MainStreet(R) systems
have grown to approximately $3 billion. This large installed base of
equipment represents a downstream opportunity to evolve the Newbridge
TDM-based circuit-switched networks of many of the world's 200 largest
carriers to hybrid, frame relay and asynchronous transfer mode (ATM) networks.
Revenue for the Company's ATM products is expected to reach record levels
again in the third quarter of fiscal 1998. This will be the ninth consecutive
record quarter for ATM revenue. Order intake for ATM equipment, driven
principally by the MainStreetXpress(TM) 36170 Multiservices Switch, is
expected to more than double the level achieved in the corresponding quarter
last year. The Company's wide area network (WAN) packet business represented
more than 50% of total revenue, up from 45% in the previous quarter. This
resulted from growth in MainStreetXpress 36170 system revenue, which partially
offset a revenue decline in the Company's more mature packet system, the 36120
MainStreet Packet Transfer Exchange frame relay system. Revenue for this
product is expected to improve in the fourth quarter of fiscal 1998.
VIVID switched routing system sales are expected to increase by
approximately 40% compared with the previous quarter, while Enterprise LAN
Distribution revenue associated with the former UB Networks products is
expected to decline slightly on a sequential basis, resulting in overall LAN
packet revenue approximately equal to the preceding quarter.
There were 20 new customers for the MainStreetXpress 36170 system in the
quarter, boosting the total number of customers for the product to more than
200. These are predominantly public carrier customers and represent many of
the world's largest telecommunications service providers. More than 90% of
the MainStreetXpress 36170 system customers are Newbridge TDM customers,
underscoring the importance to the Company of the large installed base of
carrier and corporate customers as organizations migrate to a unifying
multiservices ATM platform for various network traffic.
Total orders are expected to exceed shipments in the quarter.
''The third quarter was a challenging period for Newbridge,'' said Terence
Matthews, Chairman and CEO of Newbridge Networks Corporation. ''However,
despite the financial performance, the Company continued to advance through
numerous important initiatives. Newbridge operates in a dynamic and
competitive market. Certainly our efforts in the quarter to resolve the UB
Networks situation required a significant amount of management time and
attention. The action plan is now being implemented. The actions being taken
will enable the Company to refocus on the enterprise market from our
traditional position of strength as a WAN equipment vendor. Our new alliance
with 3Com Corporation, which we announced last week, will broaden and deepen
the product solution set Newbridge brings to the market.
''This new alliance with 3Com complements the long-standing Siemens /
Newbridge relationship, which took on the stature of a formal alliance in
broadband networking almost two years ago. Siemens, 3Com and Newbridge
represent a powerful combination in the networking industry. Together, we
introduced Carrier Scale Internetworking (CSI) at Interop in October 1997. I
am pleased to report that CSI is winning approval with many new partner
manufacturers and service providers throughout the world. It is clear that
premium IP is recognized as an important new networking requirement for
corporate customers.
''Newbridge remains solidly positioned in its core WAN business, a market
that offers excellent opportunities. The Company continues to build on its
broad and long-standing customer base throughout the world. We are focused
and intent on capturing additional business in our core markets related to new
access technologies, multiservices ATM and new networking applications.''
The preliminary revenue and earnings results in this news release are
estimates and may change upon the completion of the closing cycle for the
quarter. Final results for the quarter are scheduled to be released on
February 24, 1998, at which time the Company will provide additional analysis.
This news release may contain certain forward-looking statements that
involve risks and uncertainties. Actual results may differ materially from
results indicated in any forward-looking statements. The Company cautions
that, among other things, in view of the rapid technological changes in the
networking industry, if technologies or standards supported by the Company's
products, or common carrier services based on the Company's products become
obsolete or fail to gain widespread commercial acceptance, the Company's
business may be adversely affected. Additional information identifying risks
and uncertainties is contained in the Company's most recent Form 10-K annual
report filed with the SEC.
Newbridge Networks is a world leader in designing, manufacturing,
marketing and servicing a comprehensive family of networking products and
systems that delivers the power of multimedia communications to organizations
in more than 100 countries throughout the world. Newbridge products are the
choice of an expanding range of customers which includes the world's 200
largest telecommunications service providers, as well as more than 10,000
corporate customers, government organizations and other institutions. The
Company has facilities throughout Canada, the United States, Latin America,
Europe, the Middle East, Africa and Asia.
Newbridge Networks Corporation is a public company whose shares are listed
on the New York Stock Exchange (NN) in the United States and on The Toronto
Stock Exchange (NNC) in Canada.
SOURCE Newbridge Networks Corporation
/CONTACT: John Lawlor (613) 591-3600, john_lawlor(at)newbridge.com/
(NNC. NN)
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