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

To: Clay Takaya who wrote (11357)	5/9/1999 11:14:00 PM
From: WTSherman	Respond to of 18016

<IMHO, as a takeover bet, NN is looking better and better.< I think you might want to look a little deeper. As suggested previously, this isn't an easy thing to figure out. NN has a $5.2B market cap today and has a current revenue run rate of about $1.2B(US), which means that they're already at more than 4x revenues. However, of the $1.2 a significant portion of this is in their declining TDM business. The ATM related revenue run rate apparently is somewhere around $500M. This is the valuable piece, IMO. What's it worth to another player? 10X? That's what LU paid for ASND and everybody said that they paid too much. I think that the most reasonable case you could make today is for something around $45. That's only $8 more than it was on the market for before the pre-announcement, so I would doubt that NN management would agree to this. If you think that the kind of run that you saw in FORE and XYLN is possible here, I disagree. Even a $60 takeout would mean something like 15x revenue on the ATM piece and 3x on the rest. There's no indication that anyone is willing to pay that. Whoever did would seriously tank their stock.