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

To: James Chan who wrote (6672)	9/24/1998 10:06:00 AM
From: Ian@SI	Respond to of 18016

Thursday, September 24, 1998 Newbridge's Matthews rails at 'terrible' stock price By JILL VARDY Technology Reporter The Financial Post ÿOTTAWA - Newbridge Networks Corp. is stronger than it was a year ago, its chairman and chief executive told shareholders yesterday. But Terence Matthews' unbridled enthusiasm about Newbridge's future was tempered by frustration at the "terrible" stock price. ÿ"I think it's completely out of line with the strength of the company," he said at the annual meeting. That's not about to change if analysts' recommendations have any impact. Those attending a conference before the annual meeting said they heard little to change their forecasts for the company, which makes switches and other telecommunications equipment. ÿWhile most have "buy" recommendations on the stock, their target prices reflect uncertainty about Newbridge's ability to withstand increasing competition in the telecommunications market. ÿEven Alan Lutz, the company's new president and chief operating officer, admitted Newbridge still has plenty of work to do to improve its sales strategies and profile. ÿHe promised an overhaul of the sales department and more marketing in the U.S. He also hinted at a continued reduction in Newbridge's two-year-old relationship with German telecommunications giant Siemens AG, its marketing and product development partner. The first major product of that partnership, a 50-gigabit asynchronous transfer mode switch dubbed the 36190, is generally acknowledged to be a dud. ÿNewbridge has the biggest share of the US$3-billion market for ATM equipment for public carriers building wide-area telecommunications networks. Chief financial officer Ken Wigglesworth said it expects to remain a top player in that fast-growing area. That's part of the reason Newbridge executives predict the company will reach sales of $5 billion a year by 2002. ÿPredictions like that have prompted Gurinder Parhar, analyst at HSBC Securities, to rate Newbridge a "buy," with a target price of $49. ÿ"Instead of growing their margins, they're looking at grabbing bigger market share, which is a good strategy now," he said. ÿBut some analysts have been surprised Newbridge's major ATM contract wins in recent months haven't translated into a big jump in ATM revenue yet. ÿ"They have good growth in ATM, but I wouldn't characterize it as phenomenal," said Patrick Houghton, senior vice-president at Wheat First Union, a U.S. securities firm. "I'd like to see it faster. They have a lot of large contracts out there. When do they start kicking in?" ÿHe rates Newbridge stock a "strong buy," with a 12-month target price of US$40. ÿThe shares (NNC/TSE) closed yesterday up 10› at $33.40. ÿ