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

To: NYBellBoy who wrote (10693)	4/6/1999 10:38:00 PM
From: jeff greene	Read Replies (2) \| Respond to of 18016

NYBellBoy An analogy, I believe Alan used in the conference call, was "this development could have the impact on networks as client servers had on mainframes". Pardon the paraphrase. That statement, if accurate, should help quantify the potential revenue, it does for me. Regards, Jeff

To: NYBellBoy who wrote (10693)	4/7/1999 7:47:00 AM
From: Glenn McDougall	Read Replies (2) \| Respond to of 18016

Newbridge joint venture takes aim at Nortel Alliance will speed data transmission over phone networks James Bagnall The Ottawa Citizen Newbridge Networks Corp. has invested $60 million U.S. in a new joint venture, TeraBridge Technologies. Chicago-based TeleHub Technologies Corp., the other partner, will assume a 50-per-cent equity position in TeraBridge within 12 months. Combined, the two allies will contribute 130 employees to TeraBridge, which has already begun marketing its products to major customers. The joint venture, headquartered in Gurnee, Illinois, will marry Newbridge's switching technology with TeleHub's expertise in call-control software to create high-capacity data networks capable of carrying voice with a high degree of reliability. Newbridge's chief operating officer, Alan Lutz, said the deal had been "crafted with intelligence" so that it would not dilute his company's projected earnings per share this year. Newbridge and TeleHub have been testing each other's products since December 1997, but have decided to move now to exploit what they see as a lively new market. Telephone companies in particular want to upgrade their narrow-band (low-capacity) switching infrastructure to handle much larger quantities of digital traffic without, at the same time, having to throw out all their existing equipment. TeraBridge-built networks will provide a way of doing this. Brian Jervis, Newbridge's executive vice-president in charge of switching, estimates this market -- known in the industry as Class 4 switch replacement -- is easily worth $1 billion U.S. per year and growing rapidly. "As people deploy this new product," Mr. Jervis said, "they're putting into place the fundamental building blocks for the next-generation network." Competitors such as John Roth, chief executive of Brampton-based Nortel Networks Corp., weren't impressed. Mr. Roth said in an interview yesterday that Newbridge's latest move comes weeks after Nortel announced its own strategy for helping telephone companies migrate smoothly from their narrow-band heritage. "Newbridge's response to our Succession Network is Telehub," he said, "but our product is out and it's in trials with a lot of customers." Mr. Roth added that Nortel is better positioned to build new networks that offer customers big savings because his company builds several types of narrow-band switches now at the heart of many telephone networks. Newbridge, which has lately made a habit of hiring senior executives with Nortel in their blood, has two carefully prepared counters. "Our announcement may have followed theirs, but our product is available now," said Mr. Jervis. "We're able to put it in live networks." Mr. Jervis added that Newbridge's new switching platform -- dubbed the 4000 DVC -- will be smartly engineered to allow customers to cut costs of running their networks. "We'll be very cost-competitive compared to what Nortel has," said Mr. Jervis. A key battleground for these two networking giants could prove to be SBC Communications Inc., the second-largest local phone company in the U.S. Not only has SBC agreed to trial Nortel's Succession Network, but it's a major buyer of Newbridge's current flagship switching product, the ATM 36170. Newbridge will continue developing both the ATM 36170 and 4000 DVC, but it will be done within the same switching group with a common group of research and development personnel. However, it seems clear that the 4000 DVC is the ascendant product family within Newbridge. "Customers are buying networks, not ATM switches," Mr. Jervis said. The 4000 DVC switch, as employed by the TeraBridge joint venture, will be a core part of a new breed of network. Mr. Lutz declined to be specific about the level of sales he expects from his 4000 DVC product line other than noting "revenues of significance will be generated." New sales will likely be booked sooner than is the case for Nortel. The Brampton-based giant said earlier this year that it would not begin shipping Succession Network products in significant quantities until early 2000.