ewbridge Over Troubled Waters
Newbridge Networks Corp. got itself into trouble last week when it failed to bridge the credibility gap over projected earnings.
The company announced on Aug. 1 that earnings for the first quarter of fiscal 1995 (which ended July 30), would fail to match the 42 to 44 cents per share predicted by analysts, but would exceed the 30 cents per share per share earnings posted for the first quarter of fiscal 1994. The Canadian manufacturer of telecommunications networking equipment, with its American headquarters in Herndon, Va., will release first quarter results on Aug. 23.
While the company said preliminary estimates indicated revenues would exceed the record levels of the final quarter of fiscal 1994, they would be insufficient to outweigh increased expenses.
On the day of Newbridge's announcement, the company's stock lost nearly a third of its NASDAQ value, where it was the most heavily traded issue, falling $13.12 to close at $28.62. The next day, Newbridge's stock suffered a similar fate on the Toronto stock exchange, plunging by 30 percent.
Numerous analysts criticized Newbridge for waiting so long to break the news. The situation -- and investor panic -- was only worsened by the company's decision to make the announcement on a Canadian holiday, allowing company officials to avoid painful and pointed questions for a day.
On Aug. 4, Newbridge reported investors were filing suit in U.S. Federal District Court for violation of federal securities law regarding public statements.
Star Technologies Inc. announced net income dropped 22 percent during the first quarter to $602,000, versus the $776,000 posted one year earlier. Revenue dropped almost 13 percent to $5.9 million compared to $6.8 million last year. The Sterling, Va.-based manufacturer of high-speed computers blamed its poor performance on declining revenue from Pentagon contracts.
Under the Weather
MedImmune Inc. reported a $4.2 million loss in for the second quarter, compared to a $3.4 million net loss a year ago. Revenue increased more than 70 percent to $4 million, versus $2.3 million one year earlier. The Gaithersburg, Md.-based biotech said sales of CytoGam, its drug for kidney transplant patients, grew 67 percent to $3.1 million in the second quarter, up from $1.9 million.