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

To: Ed Frye who wrote (7741)	11/25/1998 6:37:00 AM
From: Glenn McDougall	Respond to of 18016

Newbridge delivers new deals, stronger profits Networking giant nails analysts' profit estimates James Bagnall The Ottawa Citizen Newbridge Networks Corp. yesterday delivered its third consecutive quarter of improved financial results amid strong hints that it's about to land some significant new business. Alan Lutz, the chief operating officer of the Kanata-based firm, said during a telephone conference call that Newbridge will announce today that it has won a major contract with China Post, a telecommunications carrier. He also said Global One, an alliance of Deutsche Telekom, France Telecom and Sprint Corp., would likely reveal before Dec. 3 whom it will select to build its next-generation networks. Assuming Newbridge picks up a key piece of the Global One deal, the value of these two contracts alone could be several hundred million dollars over the next few years. Separately, Cable & Wireless of Britain said yesterday it will spend $1 billion over the next five years on its high-capacity data network in Europe. Under a contract announced this year, Newbridge will supply a significant piece of this network. Mr. Lutz also said Newbridge had patched up its shakey alliance with Siemens AG of Munich with new agreements on jointly developing products and clearer rules to prevent conflicts between Siemens and Newbridge sales employees. "There were conflicts and personal issues," said Mr. Lutz, "but we've worked hard to strengthen the Siemens alliance. In fact, it's never been stronger." Siemens contributed strongly to Newbridge's sales growth in the most recent quarter. Revenues generated through Siemens's sales channel accounted for more than 10 per cent of Newbridge's total for the second fiscal quarter ended Nov. 1. They also grew by more than 10 per cent compared with the first quarter. James Kedersha, an analyst with New York-based SG Cowen & Co., said a tight alliance with Siemens makes it less likely that Newbridge would be acquired outright by another major industry player such as Lucent Technologies Inc. of New Jersey. "It makes it more difficult, but not impossible," Mr. Kedersha said. The arrangement with Siemens leaves Newbridge relatively free to pursue other alliances, including one with Lucent that could see the New Jersey giant buy a small minority stake. Dr. Jeong Kim, the head of Lucent's data-networking group, enjoys a good relationship with Newbridge chairman Terence Matthews. In its second fiscal quarter, Newbridge reported net earnings, excluding extraordinary gains and charges, of $47.6 million on record sales of $456.7 million. This works out to 27 cents a share or 18 cents U.S. -- bang on the mean estimate of 19 analysts surveyed by IBES Inc. Earnings were down 18 per cent from the same quarter a year earlier but up 34 per cent from the first quarter ended Aug. 2. Sales were up 5.7 per cent year-over-year and increased 7.2 per cent over the first quarter, which means revenues derived from the Siemens alliance were growing faster than for Newbridge as a whole. "I don't think we'll be changing our estimates for the rest of the year based on what we've seen here," said Mr. Kedersha, "but then, we think earnings will be higher than the current consensus." Newbridge also revealed yesterday that it took several one-time charges in the second quarter related to the write-down of certain, aging technologies and the cost of setting up a new sales office in Hong Kong. The company also recorded a one-time gain of $128 million on the sale of its interest in California-based ACC Corp. When all charges and gains are included, Newbridge posted net earnings of $53.3 million, or 30 cents a share, compared with $58 million, or 33 cents a share, during the year-earlier period. Earnings per share in U.S. dollar terms fell to 20 cents a share from 23 cents.

To: Ed Frye who wrote (7741)	11/25/1998 8:32:00 AM
From: Peppe	Read Replies (1) \| Respond to of 18016

Ed, <Hard for me to believe anyone was in this stock expecting better than what was delivered.> I don't agree. I think most analysts were expecting NN to beat the revenue number, announce a new deal (C&W is in current stock price) and more clarification on the alliance side re: LU. Lutz did an admirable job of deflecting the gaps and yes, we have to give him some time. I don't think the street will be too favorable to NN today. May be a good time to get back in if you believe that Global One is real. On the product side, did it not strike anyone as odd that the 50 gig and OC 48 products won't be ready until mid-99 ? The best news, imo, was the increase in cash. Makes them that much more attractive as a take-over target. Good luck to all that hung in there past earnings. Cheers, Peppe