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

To: MD Bryant who wrote (9831)	2/24/1999 8:59:00 PM
From: Caxton Rhodes	Read Replies (2) \| Respond to of 18016

Newbridge shares slip on wobbly estimates TORONTO, Feb 24 (Reuters) - Newbridge Networks Corp. (Toronto:NNC.TO - news)(NYSE:NN - news) shares dipped on Wednesday after it suggested that it was comfortable with earnings estimates in the lower end of the range of analyst forecasts. The telecommunications and computer networking firm could also be hurt by a potential change in U.S. accounting rules that would affect its value as a takeover target, one analyst said. Newbridge stock was in positive territory early on Wednesday but then turned negative in the afternoon, dipping C$1.20 to C$39.25 on the Toronto Stock Exchange, in turnover of more than half a million shares. During a conference call with analysts on Tuesday night discussing its third quarter, Newbridge executives said that the Kanata, Ontario-based company was comfortable with fourth-quarter profit estimates of $0.22 to $0.21 a share. That compares with a fourth-quarter forecast of $0.23 or $0.24 a share the company made in early February when it warned its third-quarter would disappoint. ''I say the tone last night on the call was cautious, skeptical, a lot of 'could you please back up that comment with information','' said one analyst who declined to be identified. ''But they did guide down the fourth quarter again and they are guiding down next year, again.'' First Call research house notes that estimates by analysts range from $0.18 to $0.27, for a mean of $0.23 and this was last revised on February 16. The previous mean was $0.26. Newbridge also talked down the high-end of the forecast consensus for fiscal 2000, the analyst noted. Todd Kapala, investment specialist at Charles Schwab Canada, said that market players have turned gun-shy on Newbridge and its track record of disappointing quarters. ''Because they've missed so many times ... it takes some time to get investors' confidence back,'' Kapala noted. Some analysts have remained positive, including Thomas Astle at Merrill Lynch. Astle said on Wednesday he was maintaining his accumulate rating for the near term and long term, setting a long-term price of C$48-C$52 a share. Also, Newbridge stock could have tipped into weaker turf after U.S. accounting rule makers, the Financial Accounting Standards Board, said in mid-afternoon that it will seek to end write-offs of acquired in-process research and development costs. Instead, the board wants companies to amortize and capitalize such acquired in-process costs, charging them over a period of time. ''It could put a real damper on the high-tech M&A (merger and acquisition) activity,'' the analyst noted. ''It makes Newbridge less likely to be acquired because the firm buying them would be unable to write off expenses in one fell swoop,'' he added. Also, Newbridge was poised in early December to announce a deal with the Global One group but seems to have backed away during the conference call, the analyst added.