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

To: mariner who wrote (9422)	2/6/1999 9:19:00 AM
From: Glenn McDougall	Respond to of 18016

Newbridge stock plunges 12.5% By SEAN McKIBBON -- Ottawa Sun After warning that third-quarter profits wouldn't meet analysts' expectations, Newbridge Networks shares took a beating yesterday. Investors knocked off 12.5% of the company's value yesterday, closing at $42.60 on the Toronto Stock Exchange -- down $6.10. But analysts said the company was rolling with the punches rather well considering it has been a bad week for technology stocks in general. "There were a lot of people who thought that stock was going to hit $40. JDS is down 6%, Northern (Telecom) is down three or 4%. It's not a good day for technology," said Duncan Stewart, manager of Navigator Canadian Technology Fund. The Nasdaq 100 index fell almost 2% yesterday to 1,988.55. Even JDS Fitel, which surged to more than $67 on news last month of its merger with Uniphase, was down $3.50 yesterday, to close at $56.50 on the TSE. "There's a general rethinking of technology going on," said Mark Lucey, managing director of Kearns Capital Inc. "I don't think we're dealing with any fundamental concerns. We're not dealing with the dreaded bursting of the Internet bubble yet." Lucey said market expectations for technology stocks are becoming more realistic. He said a similar process was going on with Newbridge. "The honeymoon is over and (Newbridge president) Alan Lutz is going to have to deliver. There were a lot of expectations built up on the street." Although Newbridge didn't mislead anyone about its performance projections, Lucey said its failure to hit an expected profit of 76¢ per share will mean a credibility battle for Lutz. Stewart said Lutz's frankness in a conference call Thursday with analysts will help maintain Newbridge's credibility. "I think Lutz throwing out on the conference call the comment that, 'We don't expect to get that nickel back in the next quarter,' is exactly the kind of thing that's going to build confidence with investors," he said. Both analysts were bullish about the company's prospects, saying the fall in share price was a good opportunity for investors to buy the stock at a more realistic value. "They're doing quite well in ATM. What dragged them down was slow sales with their more mature technology," said Lucey. If it is to avoid another disappointing quarter, Newbridge must keep up with demand for its new ATM product he said. Third-quarter demand in the ATM trade rose 45% over the previous quarter and led to a backlog of orders. If it can do that and stop sales of older products from continuing to slump, Lucey thinks Newbridge could see share price increases. A recovery in Asia and Latin America -- areas that Newbridge's older products appeal to -- would do a lot to help. "You could justify a purchase on a number of levels," said Stewart. The company has been a prime target for a takeover ever since Lucent purchased Ascend. He said the growth in demand for ATM only makes Newbridge more appealing for companies such as Ericsson, Alcatel or Siemens. "I'm thinking of a target price of $75. With the stock sitting at around $42-- that's a very nice rate of return." On a bad day for tech stocks in general, JetForm Corp. took another beating yesterday -- losing 80¢ to close at $8.10. That comes after the software company lost almost half of its share value Thursday after it warned investors it will report a significant third-quarter loss.