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

To: Thomas Scharf who wrote (11192)	5/6/1999 6:45:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 18016

Profit warning sinks Newbridge shares Stock falls 22% as customers' bargain-hunting tactics to bring disappointing quarterly results Thursday, May 6, 1999 SIMON TUCK Technology Reporter Ottawa -- Newbridge Networks Corp. shares tumbled more than a fifth yesterday as investors meted out stern punishment after the company's latest earnings warning. The Kanata, Ont.-based company's share price fell $11.65 to $41.95 on the Toronto Stock Exchange, after reaching a low for the day of $39.05. The meltdown followed an announcement late Tuesday that Newbridge expects to earn between 12 and 14 cents (U.S.) a share during its fourth quarter, which ended May 2, on revenue of about $460-million (Canadian). The earnings estimate is about a third lower than analysts' consensus estimates. It was the fifth time in the past eight quarters that Newbridge has warned that it will turn in disappointing quarterly results. Analysts said the communications equipment maker's supply-chain problems -- which the company cited as a chief culprit for its woes -- have been caused partly by a growing tendency among technology buyers to wait until the tail end of a company's quarter to place orders. This harder-edged buying strategy, designed to extract lower prices from technology makers under pressure to routinely produce double-digit revenue growth, has been gaining popularity over the past year or two, said David Powers, a technology analyst at the Edward Jones brokerage house in St. Louis. "Whether you're selling communications equipment or PCs, it's now common knowledge that a lot of these orders are back-end loaded," Mr. Powers said. "This is industry-wide." He said the trend is being fuelled in part by a proliferation of market research and purchasing experts who advise their clients what to get and how to make the best deals. In Newbridge's case, the company ended the quarter with $115-million in unfilled orders, with about two-thirds of its total orders being placed in the final month of the three-month period. Newbridge spokesman Paul Goyette said the trend toward ordering late in a quarter has affected the entire networking industry, but "Newbridge seems to have been hit harder than others." Newbridge president and chief operating officer Alan Lutz said the imbalance of orders is one of a number of things the company must fix. However, he acknowledged during a conference call Tuesday that the repair job could take a quarter or two. "This is not a simple thing to resolve." But analysts said Newbridge isn't the only technology company that has to deal with this dilemma. Mr. Powers suggested that the company start its overhaul by providing its customers and sales team with greater incentives to place orders earlier in the quarter. "There are things you can do to try to control that and smooth out the order process." Mr. Goyette said the company is conducting a review of its supply and delivery operations, and a new incentive program is among the possible changes. Some analysts said they are shocked that Newbridge is having such basic problems. "We're talking about blocking and tackling here," Mr. Powers said. "If you can't do that, you're going to have trouble competing." Analysts disagreed on what this latest revenue warning will mean for the possibility of new ownership at Newbridge, a widely held Bay Street rumour for a couple of years. "I don't think it changes anything," said Mark Lucey of Kearns Capital Ltd. in Toronto, "but the price has probably gone down." Richard Woo of Thomson Kernaghan & Co. Ltd. in Montreal said this latest bump reduces Newbridge's appeal. "You're looking at a company with some problems to fix." Three of Newbridge's leading competitors in the data networking industry -- Bay Networks Inc., Ascend Communications Inc. and Fore Systems Inc. -- have been purchased by larger voice networking firms in the past year, and demand for Newbridge may be picking up as the two subsectors continue to converge. Analysts said the possibility of a takeover has helped boost Newbridge's share price for months. Despite the drubbing suffered by the share price yesterday, analysts were divided on what to do with their ratings. However, they agreed that the silver lining for Newbridge in Tuesday's announcement is that demand for its flagship product, asynchronous transfer mode (ATM), is still strong. NEWBRIDGE AND THE EARLY WARNING Aug. 6, 1997: Newbridge Networks says rocky transition at UB Networks, acquired in 1996, will pull down its first-quarter revenue and earnings. Nov. 4, 1997: Share price plunges after announcement that second-quarter profit will be dragged down because of UB Networks. Feb. 3, 1998: Newbridge warns that fiscal third-quarter earnings will be 72 per cent less than expected. Feb. 5, 1999: Share price falls after surprise profit warning. May 4, 1999: For the fifth time in eight quarters, Newbridge says profit will not meet analysts' expectations. Source: Datastream

To: Thomas Scharf who wrote (11192)	5/6/1999 11:19:00 AM
From: Doug	Read Replies (1) \| Respond to of 18016

Thomas: That is the same pitch we heard at Fords, G.M and Boeing in the early 60's. It took the Japanese to show how us how it can be done. There is nothing that cannot be procured on a Multi vendor basis unless it involves a Brand new R&D Invention that is way ahead of the pack. It is ususally an attitide problem that prevents Engineers from introducing Multi Procurement philosophy right at the Concept formulation stage. That is why we have the Number system on handheld calculators clock wise and on Computers anti Clockwise.