Newbridge open to offers as profits plunge

Newbridge Networks has done an about-face on strategy, admitting it will consider takeover offers in the wake of continued poor financial results.

As revealed by Computerworld ("Newbridge Networks denies takeover rumours", CW November 19, p6), local Newbridge Networks executives had previously maintained the networking equipment vendor would stay independent.

But Newbridge's new president, Pearse Flynn, last week admitted he was not opposed to selling the company outright. He did not divulge, though, whether the company was already discussing its acquisition. Alcatel and Ericsson were among several vendors recently mentioned as potential suitors.

He also announced Newbridge would cut 10 per cent of its global workforce and outsource its manufacturing and customer service activities worldwide following a profit slide of more than 50 per cent year-on-year for the second quarter ended October 31.

The company had earlier issued its sixth profit warning in the past 10 quarters.

But despite the plans for drastic downsizing of its global operations, redundancies within Newbridge Networks' local operations "shouldn't be significant", according to a spokesperson.

Instead, the Australian branch actually plans to increase its head count, according to David Cryer, corporate communications manager.

"We are looking at employing more staff in the Sydney office," he said.

Cryer added the worldwidejob losses, which are expected to total 700, will be "heavily weighted to the US and Canada".

However, he conceded the global outsourcing of Newbridge's customer service division would result in redundancies in the company's Australian operations.

But Newbridge's plans to outsource its manufacturing would have no impact because none is conducted locally, he claimed.

Although IBM has been touted as the most likely candidate to run Newbridge's customer service division, the company's chief financial officer, Kenneth Wigglesworth, would reveal only that Newbridge has struck a deal with a "world-class organisation".

Cryer insisted that Newbridge is in a "strong financial position", with cash assets in excess of $US1 billion.

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