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Meanwhile in Canada: Nortel Takes Newbridge? August 31, 1999 6:22 AM EDT

By Bob Beaty Canada Editor

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There’s been a lot of ink spilled over network equipment stocks in Canada. And now rumors are surfacing out of the US that we may have one fewer.

Not that it will cause a huge ripple in the Force mind you, but there’s some speculation surfacing that giant Nortel Networks (quote, chart, profile) may well take a run at Newbridge Networks (quote, chart, profile).

Makes sense, as the former is about 20 times larger than the latter: Nortel could do the deal for pocket change. And even though Newbridge’s fortunes are improving, Nortel would still not have to pay anywhere near the old high of $60 per share for the company if it moves quickly.

NN currently trades at about $27, so there’s likely to be a healthy premium, but given Nortel’s size and market share, Newbridge can be taken for parts. It’s hardly a meaningful competitor.

Neither company had a stellar 1998. Nortel lost nearly C$1.50 per share and Newbridge posted a C$0.10 loss. Both took a major earnings hit last year with Nortel showing a -28% three-year performance.

-Ian.

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