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

To: pat mudge who wrote (4963)	6/4/1998 10:58:00 PM
From: Mark Kubisz	Read Replies (2) \| Respond to of 18016

Here is the full text of an article that appeared in today's Globe and Mail. I have bolded some parts for emphasis. Newbridge Networks shares drop - Investors sell stock despite results that met expectations of many analysts Investors bailed out of Newbridge Newtworks Corp. yesterday, despite year-end results that many analysts say met their expectations and could signal a return to a more stable financial performance. Newbridge shares plunged $4.85 on the Toronto Stock Exchange to close at $36.95. The stock lost as much as 12 percent during the day, touching $36.80 as more than two million shares changed hands. Heavy trading on the New York Stock Eschange knocked Newbridge shares down $3.87 (U.S.) to $25.12. On Tuesday, the telecommunications equipment maker, based in Kanata, Ont., reported that it lost $18.3-million (Canadian) or 10 cents a share in fiscal 1998. Before onetime charges, Newbridge had a profit for fiscal 1998 or $171-million and share profit of 98 cents, which was 1 cent a share better than the consensus estimate of 10 analysts surveyed by First Call Corp. of Boston. A year earlier, Newbridge posted profit of $157-million or 92 cents a share. David Powers, an analyst with Edward Jones in St. Louis, said the shares may have enjoyed a runup in recent days based on anticipation of strong year-end numbers. The so-called "whisper numbers" suggested that Newbridge might beat expectations, Mr. Powers said. He added that some investors may have been disappointed that the numbers merely matched many analysts' estimates instead of surpassing them. In February, Newbridge warned that financial results would fall short of analysts' expectations for the third straight quarter. The news caused the shares to plummet 28 per cent in one day to a 52-week low of $27 on the TSE. The stock then recovered to reach as high as $46.05 last month. Mr. Powers said Newbridge appears to be doing a better job of communications with analysts in order to avoid surprising investors with numbers that fall below the estimates. Eric Blachno, an analyst with Bear Stearns in New York, said he believes the company has put many of its problems behind it. Newbridge struggled after sales withered at UB Networks, which Newbridge acquired in December, 1996, in order to expand in the fast-growing local-area network market. He said the company's acquisition of UB was a mistake, but now he's looking forward. "I though it was a very solid quarter." Mr. Blachno rates Newbridge shares "attractive," with a 12-month target price of $40 (U.S.). Newbridge also reported on Tuesday that Alan Lutz will take over as president and chief operating officer from Peter Charbonneau. Mr. Lutz is a former executive of Compaq Computer Corp. and Northern Telecom Ltd. Mr. Blachno siad Mr. Lutz has a good background that includes significant assignments. Mr. Powers of Edward Jones said he has a "hold" on Newbridge shares, but he was pleased with the latest results, which he called "the first step on the road to recovery". "Clearly they're starting to make some progress." He cited the company's wide-area network, or WAN, packet business, which continues to book record orders. "I fall into the camp where I'm a bit concerned about he competitive environment," Mr. Powers said. "I would like to see the company become a little bit more aggressive in expanding its product line." Mr. Powers said Newbridge is facing tougher competition from new products launched by rivals such as Lucent Technologies Inc., Cisco Systems Inc., Northern Telecom and Ascend Communications Inc.