Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Greg Wai who wrote (8894)	1/7/1999 5:13:00 PM
From: pat mudge	Read Replies (1) \| Respond to of 18016

Here's one from December: 05:33pm EST 17-Dec-98 Goldman Sachs (HENRY,DIWAN) NN NNC.CA NNC.CC Newbridge Networks Corp. : January Qtr On Track, Plenty of Ongoing Change; MO Goldman, Sachs & Co. Investment Research Newbridge Networks Corp. * * January Qtr On Track, Plenty of Ongoing Change; MO * * *************************************************************************** * Newbridge Networks January quarter seems to be on track. No change in estimates; we are looking for C$480 million in sales and US$0.21 in EPS for the quarter. There continues to be a good deal of activity and change underway at Newbridge, though, and we continue to rate the stock a market outperformer based on new management's efforts to build a better business. *************************************************************************** Mary Henry (New York) 1-212 902-6787 - NY Equity Research Ajay Diwan (New York) 1-212 902-3485 - NY Equity Research =================== NOTE 5:29 PM December 17, 1998 ==================== Stk Latest 52 Week Mkt Cap YTD Pr Cur Rtg Close Range (mm $) Change Yield --- ------ ------- ------- ------ ----- Newbridge Networks Corp. MO 26.94 40-15 4902.7 -23% 0.0% --------------Earnings Per Share--------------- NN Jul Oct Jan Apr FY CY 2000 FY 0.26 0.29 0.30 0.34 1.20 1999 FY 0.14A 0.18 0.21 0.27 0.80 1.15 1998 FY(A) 0.26 0.23 0.07 0.13 0.69 0.65 -Abs P/E on- -Rel P/E on-- EV/NxtFY LT EPS Cur Nxt Cur Nxt EBITDA Growth ----- ----- ----- ----- -------- ------ NN FY NMX 22.4X 1.4X 1.0X NA X 20% CY 23.4 NM 1.1 NM =========================================================================== * Packet WAN sales (almost 60% of our projected sales) are described as strong, while TDM sales (almost 40% of our projection) are harder to call. We assume a flattish gross margin for the quarter, but cost controls should drive a big operating margin improvement (up to almost 18% from 15% last quarter); that is already in most forecasts. Siemens sales will probably up a bit as a percentage of total revenue. Siemens has been about a 15% customer for some time, and is expected to significantly increase purchases from Newbridge in 1999. * The Global One contract could still be announced this year, but if we don't see the press release early next week we will probably have to wait for the New Year. Unfortunately, we suspect there won't be any numbers on the press release. Most investors believe the contract is worth hundreds of millions of dollars over a multi-year period. A significant LMDS wireless contract is still expected first calendar quarter of '99. * Cisco's recently announced MCI contract replaces Newbridge gear, although investors were aware this would happen after the merger with Worldcom. In the past, MCI bought as much as C$15 million a quarter from Newbridge. * A recent SEC filing indicated that a spike in customer R&D funding in the October quarter (from about C$5.6 mill to C$11 million) may not be sustainable. Our numbers assume a C$2 million increase in R&D expense in the January quarter to reflect this. A sudden drop-off in customer funding could increase R&D expense, though. * With about C$900 million in the bank, Newbridge is beginning to look at strategic technology acquisitions. We think they are interested in network-based telephony. Cisco just bought Selsius, a network-based PBX, as well as Summa Four, a programmable switch company, to begin to compete against more traditional circuit switch architectures. * Even if the company does well in the quarter, we would be surprised if the estimates rose much after the report in February. Current estimates already assume a steep ramp, and Alan Lutz, the CEO, has a conservative bent. Our estimates are US$0.80 for this fiscal (April) year and US$1.20 for FY2000. Investors should expect further management changes after the first of the year as Lutz continues to reshape the company. ===========================================================================