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

To: pat mudge who wrote (11651)	6/1/1999 1:49:00 AM
From: Johnny Canuck	Read Replies (2) \| Respond to of 18016

Thanks Pat, How did you make out with your LMDS research? One segment to consider is the vertical real estate companies. It does not matter who deploys, every service provider company needs the right away to deploy antennae to service their clients.

To: pat mudge who wrote (11651)	6/1/1999 7:07:00 AM
From: Glenn McDougall	Read Replies (1) \| Respond to of 18016

Heat's on Newbridge to explain production woes Company to outline details of overhaul to investors today Jill Vardy and James Bagnall Financial Post, with files from Ottawa Citizen OTTAWA - Newbridge Networks Corp. will outline late today how it will fix production problems that forced it to report lower-than-expected results in its fourth quarter. Newbridge's conference call will give analysts and investors details of a corporate overhaul that its president, Alan Lutz, has been working on for the past month to ensure the company can produce enough of its telecommunications equipment to fill orders each quarter. Those details are eagerly awaited by analysts still confused about what happened in the fourth quarter, when Newbridge failed to produce enough telecommunications equipment to fill all its orders. "I just want to hear straight talk about what went wrong and what needs to be fixed," said Michael Urlocker, technology analyst at Scotia Capital Markets. "I'm still more in the dark than I would like to be about what went wrong." On May 4, Newbridge warned its earnings for the fourth quarter ended May 2 will be 12¢ to 14¢ (US), well below analysts' consensus estimates of 21¢ (US). Newbridge said its revenue would be $460-million, about $40-million below projections. Newbridge will focus on "what we refer to as our supply line management issues," said John Lawlor, Newbridge's vice-president of corporate communications. "We're planning to open the kimono. The focus will be more on this than on our operating results." The numbers aren't expected to change much in today's conference call to announce the official results for the fourth quarter. But analysts expect the company will disclose that it is using new software from SAP AG to manage its sales and production chain; that incentives have been put in place to convince customers to place orders earlier in the quarter to avoid backlogs; that Newbridge may increase its use of outside manufacturers; and that some management changes may be made to avoid problems in the future. Bruce Rodgers, the executive in charge of manufacturing operations for most of the 1990s, is a key player here and analysts are watching closely to see if Mr. Lutz will keep him on. Mr. Rodgers figures very large because Newbridge decided early on it would do most of its manufacturing in-house, in sharp contrast with its California-based rival Cisco Systems Inc., which contracts out the manufacturing of most of its products. Newbridge is likely to outsource more of its production to niche players like Montreal-based Primetech Electronics Inc., which already builds many of its simpler devices. Analysts will also get more detail on the margins that Newbridge's business is now generating. The company's gross margins have been dropping in recent quarters, to 56.5% in the fourth quarter from 61% a year earlier, and 63% the year before. "The decline in gross margins is one of the factors that causes me to say people should consider reducing their shares in Newbridge," Mr. Urlocker noted. A drop in gross margins is to be expected, Mr. Lawlor said, because the company's three lines of business -- core switches, broadband access equipment and the new Internet protocol equipment -- all attract different profit margins. Details of what the margins for each of those business should be outlined today, he added.