Newbridge Networks is to axe 280 jobs, mainly from its struggling UB Networks Lan unit, as it refocuses its business back to wide area networking.
Only nine months after Newbridge bought UB from Tandem in a bid to penetrate the local area networking market, it is to concentrate its resources back on what it does best - Wan systems. "We excel at Wans and we will attack local area networking from that position of strength," said Gladys Elia, a spokesperson for Newbridge.
She added: "Less than 20 jobs will be lost in Europe, the main losses will be in the US."
At the company's annual meeting last week, Newbridge also hinted that it may seek a buyer for UB.
Elia claimed that UB customers need not panic about the redirection of strategy, saying there is "no question about honouring our commitments to existing and future enterprise customers."
But Trevor Dearing, marketing manager at UB rival Bay Networks, questioned this. "Customers who installed UB Networks, suddenly seeing 280 people disappear off the face of the earth, will know there will be no future technology developed. If they want newer technology they will have no option but to look at other higher profiles like ours."
Newbridge claims the technology is still strong. It was disappointed with UB's earnings in the last quarter (see Newswire 2 December), but stressed: "It's not the products. It just takes time to integrate but UB has a very good product base, excellent distribution channels, service, support and people."
Chris Lewis, an analyst at market research company Yankee Group, said that Newbridge acquired UB for its sales and network channel but that it had found that breaking into the Lan market is very difficult against more established rivals, such as 3Com and Cisco.
The company is looking at a range of options to boost its profitability. One is to rely more heavily on pooling research and development funds with other companies. Recently, Newbridge signed a product alliance with Siemens and 3Com in the Lan market, and Lewis believes such deals will help it keep R&D on a smaller, more profitable scale, and to focus on niche markets where UB excels. "There's always room for specialists in the Lan market," he said.
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