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

To: pat mudge who wrote (6323)	9/2/1998 6:54:00 AM
From: Glenn McDougall	Read Replies (2) \| Respond to of 18016

'New' Nortel revealed By STUART McCARTHY, Business Editor, Ottawa Sun THE "NEW" Nortel was unveiled yesterday concluding a giant merger with Bay Networks that will let the Canadian telecommunications giant go after a new type of network customer. The deal was originally tabbed as a $9.1 billion US deal, but Nortel CEO John Roth said with the tumultuous scene on the stock markets, the deal officially comes in now at $7 billion. "This is one of the largest mergers in the history of data communications," Roth said. "We've completed this in just 75 days and that's really a tribute to how smoothly things have gone between the two companies and how eager we were to get on with it." The merger sees Bay Networks CEO Dave House become Nortel's president. The deal gives Nortel 80,000 employees worldwide, who were addressed in one of the largest live closed-circuit video addresses yesterday, spanning 570 locations in 150 countries using five satellite networks. "This merger has really continued Nortel's long-term strategy of bringing to our customers the broadest base of network technologies," said Roth. "Now with the addition of Bay, we have about 15,000 employees with market-hardened technology in the field of routing and IP networking. This is really critical. "(Internet Protocol) IP networking and data technology is becoming an important part of our customers' future networks," said Roth. "We're one of the few companies now that can unify these different technologies to build a single network for our customers." To do that, Nortel has created a new line of business around Bay Networks called Carrier Packet Networks. "The mandate of the carrier packet network organization is to build for our customers heavy-duty, mission critical packet networks which can operate in a consistent fashion alongside their traditional voice networks." Nortel's carrier packet network offering goes head-to-head with an offering announced last year in an alliance formed by Newbridge Networks, Siemens and 3Com. That offering, called "carrier scale internetworking" was presented as a way of selling large clients a complete end-to-end data networking solution on reliable, giant data pipelines. Roth said the new Nortel line of business will be headquartered in Boston. Nortel recently invested in or fully acquired a number of Boston-area firms for their data network technology. Roth and House conceded that until now, data networks haven't enjoyed the same reputation for reliability as traditional phone networks. "Bay Networks' specialty is high availability, high reliability networks," said House. "The NYSE is a Bay Networks network. The uptime for that network last year was 99.994%." House said Bay has already installed mission-critical networks in airlines, banks, utilities and more. "As an independent line of business within Nortel, we can further strengthen that capability and reputation," said House. While Nortel will take a slight hit on earnings this year because of the Bay acquistion, Roth said "with the new Nortel, we think we'll grow a little faster ... next year we think we can accelerate by a couple of points." That would put Nortel's total revenue growth for 1999 close to 20%. Meanwhile, Roth said the Bay acquisition means a re-evaluation of certain investments, such as the 19% stake it took in Plaintree Systems. Plaintree has leading edge gigabit ethernet switching technology, but that's a capability Bay Networks also brings to the nest. "Plaintree has some capability," said Roth. "Plaintree got itself into some financial trouble." Colin Beaumont who retired from Nortel a few years ago, has been recruited by Plaintree as their CEO. "It has to fit in our plans with what we're doing with the Bay Networks division and we'll be looking for the synergies with that instead of competing with it," said Roth. ********************************************************************* Also a great interview with John Chambers of Cisco in the Ottawa Citizen High Tech Report. Can't post it yet, not on their page and too long to write. Will post later today or early Thursday. Regards Glenn