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Newbridge stock soars on earnings

Stock in the high-end network equipment provider jumps following news of a large customer contract in China and strong second quarter earnings.

Stock in high-end network equipment provider Newbridge Networks got a boost today following news that the company secured a large customer contract in China.

Despite showing a 18 percent decline in quarterly profit, Newbridge reaped Wall Street rewards of a potentially large purchase of equipment by China Post, the state-run postal service for the People's Republic of China.

The company's stock was up about 15 percent for the day in heavy trading. Newbridge is still, however, far off its 52-week high of 46.5.

Two investment banks upgraded the stock following the news. Merrill Lynch boosted Newbridge's stock from "neutral" to "accumulate" today while SG Cowen raised the stock to "strong buy" from "buy."

Excluding one-time gains, the company earned $47.6 million, or 18 cents a share, for its second quarter, in line with analysts' consensus estimates. Newbridge earned $58 million, or 23 cents a share, for the same period a year ago.

Quarterly revenue rose slightly to $456.8 million, from $432.2 million last year.

Newbridge said it plans to provide equipment in conjunction with partner Siemens to connect offices in 31 provinces across the country. The network, based on asynchronous transfer mode (ATM) network technology, will be optimized to handle voice, data, and services based on the Internet protocol, or IP, the company said.

The China Post deal marks the second national network Newbridge has been awarded in China. Financial terms were not disclosed.