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

To: Dennis R. Duke who wrote (8075)	11/29/1998 9:04:00 PM
From: Glenn McDougall	Read Replies (1) \| Respond to of 18016

<<I said I would post ML's comments when I get the reports. Well I had to go to the office on Friday and get them.>> Dennis thank a lot, the information you posted is great. Some highlights from the upgrade opinion: >>We are changing our investment opinion from intermediate term Neutral to intermediate term Accumulate and introducing an objective of C$44-$46 (US$28-30). [This is based on P/E of 27-28 times calendar 1999 EPS. CSCO trades at 46.7 times, and ASND trades at 34.0 times the respective number. So NN at 34 times would be a target of approximately $38, or at CSCO's number $52, USD's.] This is based on improved cost controls, enchance balance sheet, improved market share outlook and rejuvenated Siemens alliance.<< Looks to me that NN has given ML what they wanted so could one assume that their target has been / will be raised to reflect a PE in line with ASCEND ($38 U.S.)? >>I could post the details they give for each of these, but I think we already known them from the CC and related information. Generally costs declined by 3% in the quarter from 46% to 43%. With G&A and R&D being the contributors. Cash rose by C$252 million. DSO and inventory improved. Cable and Wireless and China Post indicating that market share is not an issue. Supported by the InStat data showing a strong 2nd in the segment with 21% market share. Siemens working well and expected double digit growth. IP protocol not an issue because now ML understands strategy. WAn/ATM 53% of sales and is in the growth. And management changes working well and expecting more.<< I noticed that G1 was not mentioned in your post. Has ML factored a NN win in their estimates? If not Alan's wife's birthday is this week so fireworks should be on the way. >>In terms of value on a price/sales basis they comment that NN is still the least expensive, with the exception of CS which is growing more slowly. (NN, CSCO and ASND at 30%, and CS at 20% according to ML's chart.) Well, ASND during the turnaround had underestimated market prices in these reports, too. I recall being disappointed by Robbie Stephens, I think, saying ASND could not break $27 in 12 months. That was last January, as I recall.<< Given the information above and the fact that you have moved from a ASND bull to a NN bull not long ago makes the Newbridge story that much more credible. Regards Glenn