ASND Major new, its long...but important!
Paul Cook probably had SO MANY calls, the company finally took action.
Fiscal 1995 was a year of successful transition for Ascend. We furthered the move we began in 1994 from a singular focus on the videoconferencing access market--where we have long held the lead--to a broader focus on multiple expanding market segments--Internet access and infrastructure, corporate remote access, telecommuting and small office/home office (SOHO) access, and multimedia access. These market segments make up a whole new category that we call the remote networking market. Ascend is a pioneer and leader in this rapidly growing market.
Remote networking applications require dialed high-speed bandwidth, or "bandwidth on demand," using the various types of access infrastructure provided by local and long-distance communications carriers. Ascend's digital bandwidth on demand products allow temporary, high-speed connections to be established on an as-needed basis, and paid for only as used.
record financial results
The widespread acceptance of Ascend's products, which enable remote networking applications, contributed to the Company's record sales in 1995. Net sales reached $149.6 million, a 280% increase from 1994 sales of $39.3 million. Net income rose 251% to $30.6 million, or $0.28 per share as compared with net income of $8.7 million, or $0.09 per share in 1994. International sales rose significantly in 1995, growing from 20% of total sales in 1994 to 29% of total sales in
1995.
In the third quarter of 1995, the Company completed a second successful public offering that provided capital resources needed to meet our growth objectives. Also, two two-for-one stock splits, payable in the form of stock dividends, became effective on May 12 and October 8, 1995, respectively. A third two-for-one stock split became effective on January 8, 1996. The stock splits enabled Ascend to provide greater liquidity for our existing stockholders and an affordable price
for potential new investors.
strategies for long-term success
Ascend is committed to providing long-term value to our stockholders. To meet this commitment, we have developed--and are now implementing--a number of strategies for ongoing success. A summary of these strategies follows:
product strategy
To meet customers' ever-changing requirements for new and enhanced remote networking products, Ascend's strategy is to continue to expand our Multiband, MAX and Pipeline product families, delivering a steady stream of applications-focused products for a range of configurations and offered at a range of price points. Implementing this strategy, we shipped a number of new products in 1995.
The Multiband VSX, which supports scalable bandwidths for single-session videoconferencing, became the newest member of Ascend's industry-leading Multiband product family. The VSX lets users construct economical multimedia access networks for applications such as videoconferencing, distance learning, electronic banking and publishing, and telemedicine.
We also introduced several new MAX products in 1995. The MAX 4000 WAN access switch-which aggregates simultaneous incoming calls from analog, ISDN and frame relay circuits onto a single high-speed digital line-has been well received. Twenty-eight of the thirty leading Internet service providers (ISPs) worldwide have already adopted the MAX 4000 as a de facto standard. The new MAX 1800 provides the functionality of the larger MAX products on a smaller scale and
at a lower price point. The new MAX 200 offers a cost-effective solution for customers requiring dial-up network connectivity for their small and remote offices. And our new user-friendly MAXLink software turns a remote PC into a node on an enterprise network connecting to any MAX product.
In June, we introduced the Pipeline 25, an ISDN remote access bridge/router for telecommuting and small office/home office applications. In January 1996, we launched the Pipeline 130 family of remote access routers. Providing unparalleled hardware integration and software support, the Pipeline 130 combines ISDN and frame relay technology to offer customers maximum flexibility while reducing their total cost of ownership.
New EtherFrame products introduced during 1995 include a low-cost frame relay access router that extends our Pipeline family, as well as EtherFrame software that adds frame relay concentration capabilities to Pipeline and MAX products. Frame relay is an attractively priced alternative to leased lines that is increasingly being used for remote access applications.
During 1996, we will continue the strategy of providing technology and products that enhance remote networking applications, network security and access infrastructure. Products that provide more port density, higher performance and lower cost will be part of our development focus.
distribution strategy
In 1994, Ascend formulated a strategy to use a hybrid distribution channel to efficiently serve our varied base of customers. In 1995, we implemented this strategy. In North America, we established a two-tier distribution structure that uses national distributors to supply Ascend products to a much greater number of value-added resellers (VARs) than we could handle directly. Merisel, Inc. and Tech Data, two of the leading worldwide computer and network products
distributors, and Sprint/North Supply, a leading national distributor of videoconferencing equipment, were selected to participate in this program. In 1996, we will introduce this two-tiered structure in other parts of the world. To more effectively support our customers, Ascend is also implementing a market-specific major accounts program. Supported by our reseller partners, this
program enables us to provide direct coverage to large corporate customers and major telecommunications carriers in North America and other major industrialized countries in the world.
partnering strategy
Partnering with other industry leaders is very important to our continued success. In 1995, we established new alliances with several Regional Bell Operating Companies (RBOCs) and their subsidiaries, including Bell South Network Solutions, Pacific Bell, Pacific Bell Internet Services and Southwestern Bell Telephone Company. We entered into a third-party service agreement with AT&T Paradyne's Customer Support Organization, and expanded our resale alliance with AT&T Global Business Communications Systems. Also, GTE Telephone Operations, the largest U.S.-based local telephone company, announced that it will resell all Ascend access products, offering its customers integrated remote networking solutions. Ascend also expanded existing relationships with leading independent Internet service providers such as PSINet and UUNET.
acquisition strategy
As the Company grows, our strategy is to acquire technologies and expertise to enhance our core business and product capabilities. Our acquisition of the DaynaLINK products and related technology from Dayna Communications, Inc. was the Þrst such acquisition. Completed on September 1, 1995, this acquisition enabled us to rapidly expand the capabilities of our MAX product family. In late September, just one month after completing the acquisition, we introduced the MAX 200, the first Ascend product to include portions of the technology acquired from Dayna.
infrastructure building
To support and manage the Company's growth, we are continuing to add talented management with extensive experience in the markets we serve. In January 1996, Ascend established the Ascend Multimedia Access Products business unit to leverage Ascend's strength and market leadership in videoconferencing access and to lead the way in designing and marketing innovative multimedia access products that meet the needs of this expanding marketplace.
customer focus
Ascend is focused on meeting customer needs in everything we do. To ensure we stay in touch with customers' changing requirements, we are continually improving our customer support programs. Continuous customer feedback surveys with senior management involvement help us better understand customers' needs and ensure timely responsiveness. Our product development activities, our commitment to total quality management and our continuous improvement efforts
are all customer-driven. Also, our worldwide technology seminars program actively demonstrates the benefits of remote networking and provides us with the opportunity to engage in informative discussions with current and potential customers.
looking to the future
In 1995, Ascend was a leader in defining a new marketplace: remote networking. We intend to maintain a leadership position in this growing marketplace, leveraging our core technologies, resources and capabilities to rapidly deliver new remote networking solutions that meet customers' needs. Our people have made it all possible. We consider everyone at Ascend to be a partner in the business, with each person having a stake in the continued success of the Company. Thanks to our exceptional team, Ascend has accomplished a great deal in a short period of time. We are confident that our people will help Ascend continue to grow and prosper in the future.
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