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

To: Doug who wrote (5780)	7/28/1998 4:58:00 PM
From: pat mudge	Read Replies (5) \| Respond to of 18016

Doug -- I expect to see analysts ratcheting their estimates based on the call. From my notes --- all errors my own: Realignment is a first step, not end step. Part of an evolution. This gives us firm footing as we move forward. Objectives will be laid out in detail on August 26. In reference to 100-day plan, today's announcement came about because middle management said to make changes quickly. "Make them now," Mr. Lutz was told. "Don't wait." The organization was clamoring for positive changes. [Reads statement of goals:] * To be a global company. * To be known for boldness, precise and rapid execution and meeting our commitments. ú * To be a world class marketing organization, complementing our product and technology strengths. * To be a leader in employee and customer satisfaction. * To be the leading provider of highly reliable, scalable, and manageable advanced networking solutions for enterprises and service providers. * To exceed $5B in revenue by 2002, generate greater than 50% ROIC, and be listed in the Fortune Global 500. To the analysts on the call, he said, "We're in quiet period before quarter. . . so don't grill me on [numbers]." We want to be a global company. Can't be located in one and sell to all others. Have to make marketing stronger. Goal is to reach $5 billion in revs by 2002, reach 50% in ROIC, and be listed in Fortune 500. Revenue will be 50% from incumbent carriers, 30% alternative carriers, and 20% enterprise. US sales to be 35% in two years. Realignment into three product groups: Switching --- Scott Marshall Access --- Conrad Lewis IP/Internetworking --- Jim Arsenault Regional reorganization: * NSA * Europe-Africa will now include Russia --- where we can use Siemens more effectively * Aisa/Pacific New executive VP of worldwide marketing will be named. Wanted to announce today, but haven't closed. Will be an outside announcement and will be headquartered in Herndon, VA. Two divisions will include product and regional marketing. Phoenix Task Force --- developed by middle managers --- has outlined changes they see as necessary and these are being put into effect. This is a valuable engine of change. We don't launch products. We launch businesses. To this end, we need: 1) advertising program 2) testimonial accounts from beta trials 3) educated analysts who in turn can educate investors 4) worldwide public relations program 5) trained sales force 6) trained service organization These are under product groups. Regional [leaders] responsible for sales and service. Also, must recognize that each business has a life-cycle. Q&A: Cowen: How do industry consolidations affect NN? Can you go it alone? AL: We have 1700 on our technical staff --- enough to compete effectively. We like VPN and backbone. Whether we go it alone or get absorbed --- or absorb --- we must define our market position.. . . Large equals slow. We can be agile. We have 6500 employees we can mobilize. Stay tune to movie to see what happens. Warburg Dillon Read: Will Executive VP be an outside hire or internal promotion? AL: Outside hire. WDR: Any changes in hiring plans? AL: No plans to reduce. WDR: What about your $1 billion in access business over three years? AL: If we're more successful, we'll shorten it. Access is important, but don't tune up your revenue models until we define further. RBC Dominion: How do affiliates fit in to key product development launches? AL: We've aligned our affiliates into appropriate product groups. They're still separate companies but we're inculcating our products into theirs. RBCD: Any changes with Siemens? AL: Nothing has weakened alliance. Tightened [our] portfolio. Looked at other possibilities, too. Don't know of any changes. [Certainly] nothing to weaken alliance. RBCD: Could we possibly see additional partners/alliances? AL: Yes. Question about switching as it relates to R&D. AL: We're restructuring so that in allocating R&D, one can't steal from the other. Goal is to get away from large R&D structure and focus on launching businesses. Credit Suisse First Boston: Any feed-back from GlobalOne and U.S.Carriers? Siemens/NN hasn't scored 100%. AL: Yes, we've met with a number of clients. This last Friday with a large RBOC --- a term I used in another life. Pleasant meeting. [There's] competition for a significant relationship. Feel good --- we can handle what they want. VPN and management products. Siemens --- good things flow to both clients. Different access products we'd like to introduce. [There are] lots of questions. I know where we want to take it. CSFB: Management's given attention to SG&A savings of $34 million. $2 billion was mentioned on last cc as target. . . has this changed? AL: . . . this can be seen as the leadership team doing something sensible. We'll keep belt tight, not spend that increase until we know how the year's going. Scotia: What about accountability --- PL requirement? AL: There's only one PL [and that's] at my level. We're not big enough to warrant it [being] broken down. Product group is responsible for product development. . . more than designers now. P&L remains at top. [Don't know what "PL" means, so having trouble, here.] Q: Could you clarify "access" --- Tigres and Vivid. . . AL: I'll turn it over to Conrad. CL: This is last mile of carrier network. Broadband wireless, xDSL, satellite, and cable. We're focusing on broadband wireless and xDSL. 170 cards and associated families of terminating units. Last part is important. DataComs Magazine: What gaps are there in your product lines? AL: We're a strong carrier company now. Will expand to alternate carriers and enterprise markets, adapting products to those. I'm being evasive because I don't want Cisco to have too easy a time. DataComs: Siemens [is partner] also 3Com. . . then Siemens and COMS developed common platofrm. What's NN's position? AL: Siemens has been important from early on. I've had no personal conversations with 3Com. There are other brighter blips on the radar screen. DataComs: Could you clarify? AL: I'm proud we've realigned and focused on a common theme. . . . [that] other team members have advanced from within organization. . . [that there could be] big announcements on product wins. Q: What about affiliates? AL: Terry's program is brilliant. IPO is a great exit. We don't need absolute control to inculcate products. Q: Will you take restructuring charges? AL: No. DLG: [re: lagging ATM wins] what about OC 48 rollout? Scott Marshall: We've gotten large number of ATM wins. We're still the world leader. OC 48 rolling down the pile --- 1999. Robertson Stephens: What metrics can you give to gauge success? AL: This will be more clear on August 26. Specificity will be extreme then. RS: You mention ROIC of 50% -- is this currently used? AL: No, increased focus is on balance sheets. ROIC will become financial metric. Three business units are key focus. Measurements [will come] as we move on. BT Alex Brown: Any short term impact on sales? [Referring to rerorganization.] AL: One of the great turn-ons has been the organizations' reception to getting back on track --- punching competitors in the nose. There is pressure to move quickly. No hiatus at all. I see wonderful spirit evolving. No negative impact. CIBC Wood Gundy: Any change to over-all guidance for year? [Breakdown of] major groups. . . WAN/packet, VIVID. . .? AL: [Saying this was the wrong forum] let me gracefully decline to answer. >>>> For anyone who followed the call, I don't have to say Alan's closing was the highlight. <g> Pat