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

To: revbill who wrote (4601)	5/21/1998 2:07:00 AM
From: pat mudge	Read Replies (3) \| Respond to of 18016

Was the report out during Wednesday's market? Pat

To: revbill who wrote (4601)	5/21/1998 8:58:00 AM
From: Brett Nelson	Read Replies (1) \| Respond to of 18016

You know it's bad when you start cheerleading for a stock, but three observations: 1. "If the valuation corrects itself and these strategic issues are addressed -- and I think the company is in the process of doing that -- we would have no hesitation recommending the stock," MacLellan said 2. MacLellan forecasts that the company will beat that expectation by US1› a share. 3. This information was the impetus for yesterday's drop. Notice, however, that there was no wholesale institutional liquidation. Although volume increased, it was still about 1/2 of normal. Moreover, most of the sales were smaller blocks. Lastly, somone bought around 70K shares in the last 15 minutes of trading. MacLellan seems to be saying "let's wait and see if NN gets their act together; until then, I wouldn't be a buyer." This is a very low risk strategy for an analyst. If NN tanks, MacLellan looks like a hero. If NN turns itself around, MacLellan simply capitulates, saying "Yup, they fixed the problem. As I said, I have no problem recommending NN now." Well, IMHO, if NN beats their quarter and makes some favorable announcements in the next few weeks, that would go along way toward showing they're on the right path. This could easily lead to other analyst upgrades and may cause MacLellan himself to capitulate. Last point, if NN has 24% of a market which has grown 13% (and they previously held 26% of this market) their absolute $ sales still increase by more than 1%, even though their relative share is falling (smaller slice of a bigger pie). As such, on a year on year basis, this does not mean NN will miss their estimates. Today will be interesting...