Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 220.42

+4.9%

Dec 12 9:30 AM EST

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To: casey (guessed password) who wrote (13149)	9/17/1997 7:53:00 AM
From: Matt Meagh	of 61433

H and Q Report We are revising our estimates for the September quarter from $0.36 EPS on $336.6 million to $0.34 on $324.5 million. Our year-end 1997 estimates move from $1.40 EPS on $1.31 billion to $1.35 on $1.29 billion. Our year-end 1998 estimates move from $1.90 EPS on $1.78 billion to $1.85 on $1.74 billion. ú We believe that the current quarter's revenue will mainly be affected by lower than expected European sales. As we have indicated earlier, we do not believe that this is a demand issue but mainly is a new product introduction and integration issue largely related to the concerns related to the 56k modems. ú We continue to maintain a high degree of confidence in European order growth for the December `97 and the March `98 quarters because it appears that several large European accounts have placed substantial orders that have yet to be filled and shipped due to the issues related to the 56k modem. ú While we are lowering our estimates, it appears that this Company's franchise remains intact. We further believe that there is relatively little chance that September becomes a "disastrous quarter" with down sequential revenue relative to the June `97 quarter. ú We continue to hear of additional ATM wins at Cascade. Further, we continue to believe that the ATM market within the wide area network is beginning to grow at an accelerated rate and that ASND's switching division, the Cascade portion of the business, is likely to benefit substantially from this new growth. We believe that ASND's stock price may benefit from the expected announcements relative to this area during the December quarter. ú We believe that subsequent to these announcements investors will likely realize that Cascade's business has rebounded substantially and that any weakness during the December quarter will most likely occur in ASND's core business, mainly in the international sector, rather than in Cascade's business. ú Trading at only 22x our 1998 EPS estimate, we believe that this is an attractive opportunity to purchase shares of ASND given the strength and the development of their market. ú While competitors have made some gains in this space, we believe that Ascend is very well positioned with high density products which no competitor has been able to replicate. We maintain our BUY recommendation on ASND.

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