Newbridge Networks Corp, Canadian networking systems specialist, has taken another body blow from its UB Networks acquisition, made worse by deteriorating sales in Asia and Latin America. It offered Wall Street preliminary third quarter figures that showed net income will be around 72% down on last years results. The quarter ended February 1 do not quite force the company into the red, but do get close. In a deliberately veiled reference to earnings, and citing only earnings per share and even these before damaging extraordinary losses and charges (and gains), Newbridge warned that $0.07 a share net income not even in the same ball park as First Call estimates of $0.24. The figure was also well down on its $0.23 per share figure in the previous quarter and $0.36 in the year- earlier quarter. This would mean a drop to around $12m earnings from over $40m last quarter. The Kanata, Ontario -based company is also to take a onetime charge, which has been expected since early December when Newbridge laid off 280 UB employees, half of its staff. Newbridge did not say how big the write-down will be although the company suggested it would be a significant figure. Details of the charge will be released on February 24 when the company reports its financial results. The charge will also include R&D write-downs, costs of facility closings; employee severance payments; and write-downs of inventory, deferred tax assets, and good will. The quarter will also include a $50m gain from the sale of Broadband Networks Inc. Newbridge might earn some brownie points for bringing the damage to light so early, and cite time division multiplexer (TDM) sales dramatically down in Latin America and Asia. The third quarter to February 1 1998 will show sales of $247.83m, up only 8% on last year, and up 30% to $846.8m on the nine months. However, revenue for the third quarter will be down markedly from the preceding second quarter ended August 3, 1997, when Newbridge posted revenues of $299.3m. That drop is being attributed to reduced sales of its older-generation multiplexing equipment. The company insists that ATM revenues are up; the WAN packet business is still growing and its VIVID switch routing sales are expected to take off any time now. Figures were converted at a rate of $0.68842 to the Canadian dollar.
