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

To: pat mudge who wrote (7899)	11/26/1998 6:18:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 18016

Newbridge stock soars Kanata-based firm's shares jump in Toronto and New York By SUSAN TAYLOR, Ottawa Sun NEWBRIDGE Networks rode a rocket yesterday, with shares soaring $6.65 to close the day at $45.30 on the TSE and up $4.38 to end at $29.50 on the New York exchange. Still a long shot for a year-long high of $66.10 on the TSE and $46.50 on NYSE, the stock is now nearly double its low points of $23.85 in Toronto and $15.44 in New York. The Kanata networking firm was a hot trade yesterday, as the market speculated on the value of a deal with China Post. Toronto and New York exchanges halted trading at 9:44 a.m. so the market could review the firm's news release on the deal. Shares rose $4.35 to $43.10 when trading resumed after 45 minutes. It's customary to halt trading when a firm releases information that may impact share value, said Steve Kee, manager of media relations for the TSE. A variety of factors are behind the day-long love affair with Newbridge, analysts said. "The shareholders who were holding on at $95 are finally starting to see some life," said Gurinder Parhar, a telecommunications analyst with HSBC Securities Inc. "The management team is getting some credibility." The China Post deal is likely a big factor behind the boost, though it sparked some confusion. Newbridge competitor Ascend Communications Inc. put out a release it won a bid to supply China Post. "That's a little bit mystifying," said Duncan Stewart, analyst and partner at Tera Capital Corp. Ascend claimed it won a bid "to build" a public network for China Post. The company will supply network administration software, frame relay and ATM switches. Newbridge confirmed it's the exclusive vendor for the network backbone. "(CEO Terry Matthews) was in China last week for the signing ceremony with (Prime Minister) Jean Chretien," said Paul Goyette, assistant vice-president of corporate communications. Newbridge is already shipping equipment for the national network, Goyette said, but other firms could have made deals for different parts of the project. The firm wouldn't disclose the value of the deal, but Parhar estimates Newbridge will earn tens of millions for the first phase. He adds the project could ring in hundreds of millions on the firm's books in the next few years. The firm also released second-quarter results Tuesday that met market expectations, for the third quarter in a row. Merrill Lynch & Co. raised its near-term rating to accumulate from neutral yesterday and SG Cowen moved to strong buy from buy. Stewart agreed Newbridge's second-quarter results played a factor in the buoyant shares. While the numbers met projections, he was concerned by record results for older TDM equipment, while flagship ATM sales didn't see similar growth. ATM sales were up 24% over the same quarter last year, but Stewart expected growth in the 45% range, which Lucent has pegged. "I don't think it was that great a quarterly performance," he said. "It's still viewed as a laggard and so people are pushing that up." Rumours of a takeover or investment from Lucent could also play a factor. There's been long-standing discussion that Lucent could buy a stake, perhaps 10-15%, in Newbridge. In a conference call Tuesday, Newbridge president Alan Lutz said the firm has strengthened its alliance with Siemens. A strong partnership could work against adding another alliance to the Newbridge fold.