Newbridge Reports Lower Sales, Profits; Plans Restructuring

Newbridge Networks on Thursday posted lower-than-expectedearnings and revenue for its second fiscal quarter and announced a broad restructuring, including layoffs. The disappointing financial report came as no surprise, as the struggling network equipment developer issued a profit warning two weeks ago.

For the quarter ended Oct. 31, the company reported net earnings of $206.22 million on revenue of $328 million. Per- share earnings were 8 cents, far below analysts' estimates of 18 cents or more.

Newbridge put the blame, in part, on sluggish North American sales, inducing the resignation earlier this week of Giulio Gianturco, executive VP, North and South America region. Gianturco's departure follows the resignation of Alan Luft, president and chief operating officer, who left after Newbridge issued its earnings warning.

Newbridge said it would cut 10% of its workforce, restructure operations by outsourcing manufacturing, and focus product development and sales on the wide area ATM switches and broadband access devices that make up its most popular products. In a prepared statement, CEO Terrence Matthews said the company is "considering all strategic options" to increase shareholder value, hinting that Newbridge might be ready to alter its long-held stance against being acquired by another company.