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

To: pat mudge who wrote (6176)	8/26/1998 5:42:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 18016

Newbridge nails numbers 1st quarter results buoyed by $300M deal with U.S. telco By SUSAN TAYLOR, Ottawa Sun NEWBRIDGE Networks' announcement of a $300-million deal yesterday eclipsed first quarter results that met market expectations. The telecommunications equipment developer will release details today on a three-year deal with U.S.-based SBC Communications Inc. The bulk of the equipment centres on Newbridge's 36170 ATM Multiservices switch, said Newbridge president Alan Lutz. "That was a big surprise," said Gurinder Parhar, a telecommunications analyst with HSBC James Capel Canada Inc. in Toronto. While the market had been expecting news of a major U.S. purchase, there were no rumors Newbridge had won any deals, Parhar said. "Everybody's been waiting for the big U.S. guys to start popping into the Canadian market." SBC is among the largest U.S. telcos, with 32 million access lines and more than 87 million potential customers across the country. Newbridge saw revenue of $426 million, down slightly from $434.7 million in the first quarter of 1997. Net earnings were $35.5 million, 20cents per share, down from $64 million, 37cents a share, in the same period last year. In the same period last year, Newbridge earned $69 million from UB Networks sales, while this quarter saw only $7 million in earnings. First Call consensus estimates put earnings at 14cents US a share, 20cents Cdn, which the firm met. "They didn't make the whisper number, which was 21cents or 22cents," said Duncan Stewart, an analyst with Toronto-based Tera Capital Corp. Still, he found the results encouraging. Some analysts were surprised by 22% growth over the last quarter in TDM sales, which earned $183 million in the quarter. That line had been in a slump. "The recovery in TDM is certainly encouraging," said Stewart. Sales for packet products were up, reaching $243 million. That represents 57% of Newbridge's total revenue. Sales in Wide Area Network packet products were up 11% over the last quarter. Newbridge also announced its order intake was up 17% over the last quarter, driven by strong growth in ATM products. "We have record backlog right now," Lutz said. And executives said they expected major opportunities to open in the local multipoint communication systems market. Last week Newbridge landed deals that are expected to bring in nearly $500 million over the next four or five years. Newbridge CEO Terry Matthews called North American business in that market "really just a flea bite ... This is a worldwide phenomenon, where there is considerable belief in Newbridge approach." Shares fell 30cents on a tumultuous day on the TSE yesterday to close at $36.30 before the results were released.