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

To: Glenn McDougall who wrote (6179)	8/26/1998 6:05:00 AM
From: Glenn McDougall	Respond to of 18016

Newbridge turns profit in quarter Unveils $300-million deal with large U.S. phone firm Wednesday, August 26, 1998 By Lawrence Surtees Telecommunications Reporter Globe & Mail Newbridge Networks Corp. has regained its footing after stumbling for the previous three quarters. After nine rocky months, Newbridge not only turned a profit -- finally shrugging off the effects of a disastrous acquisition -- but also announced a $300-million deal with a big U.S. phone company that further brightens its prospects. Alan Lutz, president and chief operating officer of Newbridge, pointed to the agreement with SBC Communications Inc. of San Antonio, Tex., as proof that the company's turnaround will not be short-lived. "I think we've taken the first step to turning the corner," said Mr. Lutz, who took over that post in early June. Newbridge turned in its best performance in the past three quarters, posting a first-quarter profit of $35.5-million or 20 cents a share for the period ended Aug. 2. Analysts had expected the company to earn 21 cents in the quarter, according to a consensus forecast based on a survey of four analysts by First Call Corp. of Boston. Newbridge, based in Kanata, Ont., had a profit of $64.3-million or 37 cents a year earlier. However, the company suffered substantial losses and stalled growth in the previous three quarters because of problems incurred from its $108-million (U.S.) acquisition of UB Networks from Tandem Computers Inc. in December, 1996. Instead of buying an entr‚e into the fast-growing local-area network market, Newbridge acquired a company with declining sales and incurred heavy charges from writing off UB's research expenses and closing most of its operations. Newbridge's revenue fell to $426.1-million (Canadian) in the quarter just ended from $434.7-million a year ago. However, sales for the recent quarter only include $7-million from the now defunct UB Networks, compared with $69-million a year ago. That overall decline masks an increase in revenue from Newbridge's other two core markets. Newbridge posted an 11-per-cent gain in sales of data network equipment, which now account for 57 per cent of company sales -- or $243-million in the quarter just ended. And sales of its multiplexing equipment that boosts the capacity of phone lines rose 22 per cent to $183-million in the recent period -- a marked reversal of the stalled growth in that segment in the preceding quarter. The value of Newbridge's orders received also rose 17 per cent to a new record. Mr. Lutz pointed to that improvement, as well as to the forthcoming contracts from SBC, as proof that Newbridge's existing business can grow. "But we must also demonstrate to investors that we can better manage the company," said the 52-year-old veteran executive of both the telecommunications equipment and personal computer industries. Newbridge's expenses rose by only $5-million in the quarter just ended, helping the company to turn in its first positive cash flow in the past five consecutive quarters. "We'll remain on a pretty strict diet," Mr. Lutz told analysts and reporters on a joint conference call yesterday. He added that further improvements will come from the work of seven task forces he has formed since joining the company that are charged with revamping every part of Newbridge's operations. But Newbridge executives also see further growth on the horizon from its recent entry into a new market segment. Newbridge's deal with SBC comes one week after the company won two major contracts worth up to $600-million in the next four years from both of Canada's largest high-speed, or broadband, wireless network operators. "We think we have a one-year lead over all our competitors in the wireless broadband market and we expect to sustain that lead by building on our recent contracts," said Newbridge founder, chairman and chief executive officer Terence Matthews. Newbridge's results were released after major North American stock markets closed yesterday afternoon. Newbridge's share price fell 30 cents on the Toronto Stock Exchange to close at $36.30. Trading was heavy with almost 860,000 shares changing hands.

To: Glenn McDougall who wrote (6179)	8/26/1998 6:09:00 AM
From: Glenn McDougall	Read Replies (2) \| Respond to of 18016

Wednesday 26 August 1998 Newbridge revenues, earnings down Network giant shows signs of strong recovery James Bagnall The Ottawa Citizen Newbridge Networks Corp. sent out several strong signals yesterday that it is close to putting the UB Networks debacle behind it. The Kanata-based manufacturer revealed it has signed a three-year deal -- worth an estimated $300 million --to supply SBC Communications Inc. with a wide range of communications gear. Aside from providing a big financial boost for subsequent quarters, the SBC deal is an important endorsement of Newbridge's next-generation products, which are based on asynchronous transfer mode technology. SBC, one of the largest regional Bell operating companies in the U.S., joins BT of Britain and MCI Communications Corp. of Washington, D.C., among others, in selecting Newbridge as a primary supplier of core data networks. Newbridge's new president and chief operating officer, Alan Lutz, also intimated yesterday that the company's sales of high-capacity wireless systems were much better than expected. "It's a bigger opportunity than we thought it was," he told financial analysts. "We think we've got a tiger by the tail." Mr. Lutz offered these thoughts during a conference call to discuss Newbridge's first quarter results, which were released yesterday following the close of trading. While the overall numbers remain disappointing, they disguise a number of important trends that favour Newbridge. For starters, growth in the company's two main product lines has nearly made up for plummeting sales at UB Networks, the California-based computer networking firm Newbridge acquired early in 1997 for $147 million. Newbridge posted sales of $426.1 million for its first fiscal quarter ended Aug. 2, down about two per cent from the same quarter a year earlier. Excluding the impact of UB Networks, year-over-year growth would have been 14 per cent. Newbridge returned to solid profits for the first time in three quarters, but these remain well below the levels achieved prior to the UB Networks purchase. Second-quarter earnings were $35.5 million, or 20 cents per share -- a 44.8-per-cent drop from the same quarter a year earlier. In U.S. dollar terms, first-quarter earnings were 14 cents per share, bang on the mean estimate of 19 analysts surveyed by IBES International Inc. "We've made a very strong first step forward in transitioning the company," Mr. Lutz said. With sales of UB Networks (now part of Newbridge's computer networking group) having pretty well bottomed out at $7 million in the first quarter, Newbridge can now concentrate on its more robust products. Overall, new orders topped shipments for the eighth straight quarter, producing a near record backlog. Sales of the company's flagship switch, known as the MainStreetXpress 36170, were up 75 per cent, compared with the first quarter last year. This, in turn, has helped to transform the nature of the firm's business. Newbridge's newer-generation products, which are based on packet technologies such as asynchronous transfer mode and frame relay, generated $243 million in revenue and now represent about 57 per cent of the firm's total. The ratio would have been higher but for the surprisingly strong showing in the quarter of Newbridge's older product line, which is based on time division multiplexing technology. TDM sales were $183 million, or $30 million higher than the consensus forecast, according to Robert MacLellan, an analyst with Toronto-based Kearns Capital. However, the TDM portion of Newbridge's business seems destined to slide further. In part, this is because of the firm's recent breakthrough in high-capacity wireless contracts. Newbridge said last week that it had won a pair of contracts to supply roughly $550 million worth of wireless communications systems to Ottawa-based MaxLink Communications Inc. and WIC Connexus, a unit of WIC Western International Communications Ltd. of Vancouver. The systems will be based on ATM technology and could provide Newbridge with a big advantage in pursuing similar business in the United States. Newbridge chairman Terence Matthews said yesterday his company is actively marketing its wireless experience to the nearly 50 U.S. firms that have won licences to provide a wireless service known in Canada as local multipoint communications systems. Newbridge's victories here were a bit of a sore point with at least one analyst, who queried whether Mr. Lutz's earlier revenue forecasts had included some provision for the two Canadian wireless victories. Mr. Lutz's response: "I'm sorry we pulled a surprise. We've just landed the business in the last two weeks, so you've got to cut us a little bit of slack." This is known in the business as a positive surprise. And it's been several quarters since Newbridge produced one. The underlying message yesterday was to expect more.

To: Glenn McDougall who wrote (6179)	8/26/1998 9:58:00 AM
From: pat mudge	Respond to of 18016

Comparing the investment to the hi-tech equivalent of building the national railway, Manley and members of the Bell Canada-led consortium said the new network will also be good news for the economy. Commercial applications will include videoconferencing and enhanced virtual reality. "We don't even know what all of the applications will be, but we do know that many of the those applications will not be developed on the old, slower-speed network," Manley said. Well put. Putting the optical backbone in place is the tip if the iceberg. It's what it allows that's the key. Again, Canada's ahead of the pack. Pat