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

To: Serge Collins who wrote (5798)	7/29/1998 3:22:00 AM
From: pat mudge	Read Replies (2) \| Respond to of 18016

Oops, found another. This time Dow Jones' release on the CC: BTW, what's with MacLellan? >>> Dow Jones Newswires -- July 28, 1998 Newbridge Not Guiding Analysts To Expect Lower FY99 Revs Dow Jones Newswires TORONTO -- Communications equipment maker Newbridge Networks Corp. (NN) isn't guiding analysts to expect lower revenues in fiscal 1999, despite speculation to the contrary. Some analysts recently said Newbridge will soon tell investors to expect less than C$2 billion in revenues in fiscal 1999. They came to that conclusion after learning that Newbridge recently cut about C$35 million from its fiscal 1999 budget, but hadn't told analysts to boost their earnings expectations. But during a conference call Tuesday, Newbridge president and chief operating officer Alan Lutz said Newbridge decided to cut expenses to "keep the belt tight" until it could see how fiscal 1999 was unfolding. He said there was no hidden agenda behind the spending cuts. Lutz discussed this and other issues during the call, which followed news of a company reorganization. Newbridge said Tuesday that it's dividing into three product divisions: Switching, Access, and Internet Protocol and Internetworking. Newbridge used to function as one main product team, with about 16 affiliates working around the company in various areas. An executive has been hired to lead each new division. The Switching division will include the company's core asynchronous transfer mode, or ATM, equipment. The Access division will include such areas as broadband wireless and wave division mutliplexing equipment. The Internet Protocol and Internetworking division will include local area network switching products and IP telephony, video and remote access services. The reorganization is part of Lutz's efforts to revitalize Newbridge after an ugly fiscal 1998. Lutz was appointed in June and since then, several senior Newbridge executives have left the company. Lutz told analysts he wants Newbridge to improve U.S. sales, continue to expand its customer base beyond large telephone companies and fix its "deficient" marketing. He said he wants Newbridge to be a C$5 billion company by fiscal 2002, including C$1 billion from the Access division. The reorganization won't involve firing employees or taking any restructuring charges, he said, adding that he doesn't expect the move to hurt revenues in the short-term. Despite recent speculation that the company's alliance with Siemens AG (G.SIE) might be weakening, Lutz said the reorganization won't harm the alliance. There was no indication during the call that the alliance is weakening, There has also been much talk recently that Newbridge Networks Corp. (NN) may sell some of its affiliated companies, or buy some of them outright. But Newbridge president and chief operating officer Alan Lutz said Tuesday that he prefers to continue the strategy of letting the affilates grow until they can go public. Only CrossKeys Systems Corp. (CKEYF) has gone public to date and its share price closed at 5 3/8 on Nasdaq Tuesday, far below its December 1998 initial public offering price of US$10.50. Although Newbridge didn't tell analysts to lower expectations, Lutz noted during the call that the company is in a quiet period before it announces its quarterly results. Newbridge will announce its first-quarter figures at the end of August. At least one analyst still believes Newbridge may tell the street to lower expectations after the first-quarter results are announced. Rob MacLellan of Kearns Capital Ltd. wrote a research note on July 23 saying he expects sales guidance to come down after the first quarter. But he said earnings guidance will likely stay the same because of the company's recent cost-cutting measures. After the call Tuesday, MacLellan said he hasn't changed his opinion. "If anything, our fears were reinforced," he said. But MacLellan added that Lutz's moves to reorganize the company are positive. -By Scott Adams; 416-943-7800>>>>