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

To: E Ramos who wrote (11087)	5/4/1999 4:40:00 PM
From: gbh	Respond to of 18016

Tuesday May 4, 4:27 pm Eastern Time Company Press Release Newbridge Networks Announces Preliminary Estimates of Financial Results for Fourth Quarter Fiscal 1999 KANATA, ONTARIO--Newbridge Networks Corporation today announced preliminary estimates of financial results for the fourth quarter of fiscal 1999, which ended May 2, 1999. Revenue for the fourth quarter is expected to be approximately $460 million. Operating earnings for the quarter are expected to be US 12 cents to 14 cents. ''The quarter was a significant disappointment,'' said Alan Lutz, president and chief operating officer, Newbridge Networks. ''We had record order intake but were unable to convert this to better than expected sales levels. ''One of the jobs of the management team is to fix problems once they are recognized. Let's look at the facts related to the quarter. We had exceptionally strong customer demand for our products, especially for our ATM+IP product lines. Order intake in the quarter was approximately $550 million. Book-to-bill exceeded 1.2 for all product lines. Sequential order increases in Europe and in the Americas were approximately 30 percent and 35 percent, respectively. Order intake for our WAN packet product lines increased 30 percent over the third quarter. I believe that this strength in customer demand is the result of the work that has been accomplished in the last three quarters to rejuvenate the product portfolio, improve the sales process, as well as the favorable macroeconomic conditions for networking product. ''However, a problem exists which prevented us from converting the great strength in orders to strength in sales. For the quarter just completed, two-thirds of our sales occurred in the last month of the quarter. To accommodate this demand, we pre-build equipment to the quoted specifications and modify it to the required capability when the order arrives. This requires organizing extra manufacturing capacity, organizing supply lines to us, optimizing order entry tools, creating incentives for sales people to order early, pruning the portfolio to elements which can be stocked, and much more. Our control of this activity is not robust enough to allow us to generate consistently predictable results and must now be changed. ''To add credence to this conclusion is the fact that one minute after the quarter closed last Sunday night, we still had orders, required by customers, amounting to $115 million. But we had run out of time. ''We are now organizing to fix this supply-line management issue and will provide more details and monitorable metrics at the final results announcement on June 1, 1999. ''Let me summarize. Customer demand for our product is very strong. We do not have a supply-line management mechanism that will allow us to predictably manage the quarter-end wave of shipments. We carry significant backlog into the first quarter, but temper our enthusiasm for that quarter with the humility that comes from the experience of this pre-announcement.'' This news release may include certain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from results indicated in any forward-looking statements. The Company cautions that, among other things, in view of the rapid technological changes in the networking industry, if technologies or standards supported by the Company's products or common carrier service offerings based on the Company's products become obsolete or fail to gain widespread commercial acceptance, the Company's business may be adversely affected. Additional information identifying risks and uncertainties is contained in the Company's most recent Form 10-Q quarterly report and Form 10-K annual report filed with the SEC. Newbridge Networks designs, manufactures, markets and services networking solutions to organizations in more than 100 countries. The Company leverages its relationship with a growing family of Newbridge Affiliate companies and strategic alliances with Siemens and 3Com Corporation to deliver seamless, end-to-end solutions. Newbridge customers include the world's 300 largest telecommunications service providers and more than 10,000 corporations, government organizations and other institutions. Founded in 1986, the Company employs more than 6,000 people on six continents. News and information are available at www.newbridge.com.