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

To: tech101 who wrote (7740)	11/25/1998 6:43:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 18016

Newbridge meets mark By SUSAN TAYLOR, Ottawa Sun NEWBRIDGE NETWORKS' second quarter came in on target, but the networking firm missed the stock market bull's-eye yesterday. "It was a hair of your chinny-chin-chin quarter," said one analyst, who asked not to be named. "They just made their numbers." Shares dropped $1.60 on the TSE to close at $38.75 and fell 88cents on the U.S. Nasdaq to close at $25.13 before Newbridge released its results. Newbridge hit an estimate of 18cents US per share, or 27cents CDN, widely-held by Bay Street and analysts polled by First Call Corp. The quarter included a one-time gain, for $128 million, from the sale of California-based Advanced Computer Communications to Sweden's Ericsson AB for $258 million. Newbridge had a 51% stake in the remote access equipment firm. The results also show R&D spending cuts, down from $66.2 million for the same period last year to $63.5 million. "Normally, cutting your R&D is not considered good," said the analyst. In a conference call, executives said there's been no major changes to the number of staff, but some employees have been shuffled to different projects. Spending isn't likely to increase this year. Meanwhile, many analysts were left scratching their heads on a deal Newbridge announced yesterday. The firm said it will supply asynchronous transfer mode (ATM) equipment for a five-year $1 billion European expansion by Cable and Wireless. "I don't think it's just in my mind," said Duncan Stewart, an analyst and partner at Tera Capital Corp. in Toronto. "The street is saying what's the size?" One analyst suggests it falls in the $10-$20 million range. Newbridge wouldn't disclose the value of the deal, nor would it add details on a deal with China Post it will announce this morning. For the quarter ending Nov. 1, Newbridge had record sales of $457 million, up 7% over last quarter. Without the one-time gain and charges -- to phase out old switches, relocate Asian headquarter and write down investments -- the firm recorded a profit of $48 million, up 34% over the first quarter. "We've got a staircase performance profile to achieve this year," said president Alan Lutz. "We've now stepped up and climbed the first two stairs." Sales growth was fuelled by demand for wide area network packet technology, which includes Newbridge's flagship ATM switches. WAN products, which make up 53% of sales, hit $244 million, up 10% from last quarter. Executives wouldn't specify ATM sales. Meanwhile, Newbridge's older time division multiplexer technology sales hit a surprising $194 million, a record in the last five quarters. Some expenses were up. Sales and administration costs hit $134.8 million from $123 million in the same period last year. During the quarter, Newbridge boosted its cash holdings to $761 million, up $252 million from the previous quarter. Lutz didn't rule out using that money for acquisitions.