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

To: Glenn McDougall who wrote (7612)	11/21/1998 12:50:00 PM
From: Dennis R. Duke	Read Replies (2) \| Respond to of 18016

Merril Lynch's, Joe Bellace, First Vice President and Analyst for this sector wrote a research report and released it on November 11, 1998. The highlights regarding NN are below: EPS: For the December quarter, we are forecasting an unweighed average increase in EPS of 38% (for the six companies we expect will have meaningful growth rates). We expect Newbridge Networks and Acend to report the strongest EPS growth. What is interesting about that comment is table 2 of the report is an EPS chart for 9/96 through 12/98E, with 11 companies. If I highlight the ones with growth, rather then declines or flat and include ASND I get 6 companies with the respective actual and forecast 9/98 and 12/98 quarterly EPS (A-Actual, E-Estimate); ASND .32A .32E, COMS .24A .32E, CS .09A .11E, CSCO .34A .35E, FORE .09A .11E and NN .18E .22E. So according to this chart the growth in earnings 9/98 to 12/98 are in ranked order; COMS 33%, NN 22.2%, FORE and CS 11%, CSCO 2.9% and the mighty ASND flat. Newbridge is clearly in the hunt for repairing its EPS. Historic data for the quarters 9/96 to the 12/98E are: .26, .27, .28, .26, .23, .07, .13, .14, .18, .22, respectively (Can you tell I have been doing SEC work lately?). Pat says expect the estimate and no more (sound like what I used to say on the ASND thread during its rebuilding). If we get that, we have a pattern similar to last year's re-building of faith effort that Michael Ashby brought to ASND. Deliver the EPS in a predictable fashion and the street loves you. If history is a guide that could mean that NN is on the mend like ASND was at $22, IMHO. Industry Trends: During the June quarter, the ATM LAN Switch market increased by 81% year-over-year to $228 million, and the ATM WAN Switch market increased by 60% year-over-year to $474 million. For 1998, we are forecasting the ATM WAN/Multiservice WAN switch and ATM LAN switch segments will increase by 45% and 63% over 1997, respectively. It is nice to be in a growing sector. That was about all that was about NN. ML does not have a current report on NN and maintains a C-3-2-9 rating, ASND is rated a C-2-2-9, CSCO is a C-2-1-9. As I recall, ML rates risk, near term opinion, long term opinion and dividend information in their ratings. So none in the sector are a strong buy according to ML, which would be a "1". The plus I see is that if NN does the estimate they could easily be moved up to a C-2-2-9, and be considered an upgrade by Merrill Lynch based on earnings returning to growth and a good forward looking CC. Alan Lutz did not jump the CPQ ship to sink. I look forward to full speed ahead under his control. For ASND the management change that made a difference was Michael. For us now I think it is Alan. Time will tell. Thanks for reminding me to look up that report. I am a little flaky sometimes. Later, (-8 Dennis 8-)