Newspaper article The Christian Science Monitor

Toronto Stock Soars; but Will Balloon Pop?

Newspaper article The Christian Science Monitor

Toronto Stock Soars; but Will Balloon Pop?

Article excerpt

WHEN a stock goes from $18 (Canadian; US$14.1) to more than $110 (US$86.4) in less than a year, some people might get nervous. But not with this one, it seems: It has split two-for-one and keeps on going. "It was the second highest-priced stock on the exchange until it split the other day," says Catherine McGravey of the Toronto Stock Exchange.

The company is Newbridge Networks, an Ottawa-based firm that makes its money in arcane corners of telecommunications like multiplexing, which expands the capacity of telephone lines, particularly private networks used by companies to send data and faxes. The technology also can be used in "local area networks," where a number of personal computers are linked together.

Another specialty technology is ATM, or asynchronous transfer mode. The technology speeds the transmission of data over telephone lines by as much as 45,000 times. At that increased speed, enough additional information could be handled to turn a desktop computer into a video conferencing machine.

Sales are increasing, but so far Newbridge Networks has made more money for its investors than it ever has selling equipment.

The company is run by Terrence Matthews, a man who once before turned microchips into gold. Mr. Matthews and a partner founded Mitel in the 1970s. It, too, was an Ottawa-based manufacturer of telecommunications equipment. And it, too, was a darling of the stock market, reaching a high of $48 before coming crashing back to earth.

Mitel eventually was sold to British Telecom in 1985. Its two founders have gone their separate ways; Matthews seems to have retained the magic touch, and he has learned from his earlier experiences, analysts say.

A British immigrant to Canada, Matthews started at the bottom as a researcher with a telephone company before striking out on his own. He has struck it rich again. Mitel manufactures switches, using part hardware, part software. Newbridge's products also involve hardware and software.

ANALYSTS credit Newbridge's success not only to its technology but also to a change in strategic planning; instead of trying to sell its networking products itself, it has allied itself with major telephone companies and other big sellers of communications equipment such as Xerox. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.