Seventh profit warning last straw for Lutz

Newbridge Networks' chief operating officer and president Alan Lutz resigned last week after the vendor issued a second quarter profit warning.

It was the seventh such announcement in the past three years.

Newbridge expects turnover of about $480m (£300m) for its second quarter to 31 October, with earnings of 8 to 10 cents a share.

Newbridge shares fell after the announcement as market watchers questioned the vendor's long-term viability. "We are doubtful of the company's ability to succeed as an independent supplier," said Michael Urlocker, financial analyst at Scotia Capital Markets.

The warning cast doubt on Newbridge's recent claim that it had solved the supply chain woes it blamed for much of its poor performance in the recent past.

It also prompted speculation that Newbridge would be targeted for acquisition by other industry players. Gareth Williams of analyst Frost & Sullivan said that the company still has many attractive assets.

"Newbridge is important in the market, but it can't be discounted that it is going through a bad patch. It has put products and people in place to compete and is heading in the right direction," said Williams.

Newbridge chief executive Terrence Matthews said the quarter was "a disappointment", but was keen to stress the company's strengths.

"Despite the setback this quarter, our ATM+IP or WAN packet switching revenues were up approximately 40 per cent compared with last year," said Matthews.

He added: "I am working with the senior team of Newbridge to finalise an action plan. We will look at what requires attention: primarily sales effectiveness and our ability to scale customer-facing resources."

Newbridge's EMEA general manager Pearse Flynn has replaced Lutz in the COO role.