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

To: zbyslaw owczarczyk who wrote (9612)	2/13/1999 8:13:00 AM
From: Glenn McDougall	Respond to of 18016

Newbridge shares tumble on news of lost contract Jill Vardy Financial Post Newbridge Networks Corp. executives were scrambling yesterday to do damage control as the loss of a key wireless contract knocked down its share price by $3.70, to close at $36.30. The executives insisted the loss of a contract to sell wireless switching equipment to WIC Connexus won't hurt its profit and revenue growth. Sources close to the company said Newbridge feels it was the victim of a change in management at WIC Connexus since its parent company, WIC Western International Communications Inc., was snapped up last fall by Shaw Communications Inc. The contract has now been given to Newbridge arch-rival Cisco Systems Inc., a long-time supplier of equipment to Shaw. Analysts, meanwhile, don't see Newbridge as an innocent victim. "This is a well to which analysts have been led repeatedly by the company. Now that the well turns out to be dry, that has to create a certain amount of disillusionment," said Duncan Stewart, analyst at Tera Capital Corp. The loss of the contract is the latest event in a string of bad luck to hit Newbridge. On Feb. 4, the company warned its third-quarter earnings were 5¢ a share below expectations because of weak sales of its older equipment lines. Then on Thursday, one of Newbridge's affiliate companies, West End Systems Corp., declared bankruptcy. That forced another Newbridge affiliate, CrossKeys Systems Inc., to write off $1-million worth of bad accounts. Analysts charge Newbridge has inflated the prospects of its wireless products -- based on local multipoint communications service (LMCS) technology -- to compensate for its weakness in other product areas. The loss of the LMCS contract will hardly impact Newbridge's revenue prospects. "But the appearance of the loss is another matter entirely," said Paul Silverstein, technology analyst at BancAmerica Robertson Stephens. "The confluence of events couldn't have been worse . . . The reality, though, is that this is modest and probably won't set the company back at all." Mr. Lutz has said Newbridge will boost its mainstream products by soon making several technology acquisitions. And the company insists the contract loss doesn't put it out of play in the LMCS market, where it has existing contracts with Central Texas Telecom, Korea Telecom, and others.