IT's interesting ASND now doesn't talk about the remote access side of business at all. It almost seems CSCC took over ASND.
By definition, given that revenue from core switching will "cross" revenue from RAS/RAC in 1998, CSCC will become the most important part of ASND. You really have to credit Ejabat for anticipating the change. Either he was a great planner or he was just lucky. Either way, it works for me. I would not stay invested in ASND if it were only RAS/RAC, for that is not the current growth area.
RAS/RAC got killed by declining margins and by tapped-out ISPs (even so, RAS revenue will be flat year-to-year). One beauty of the CSCC side, as noted in Scottsdale, is that Telcos are far more focused on reliability than on price per switch. That allows for considerably greater margins (and a key reason why the drop off in 1998 margin will only be 1 percent...had RAS/RAC been everything, the drop off would have been far greater). That also is one reason, as stated in Scottsdale, why ASND is pumping up R&D to 13 1/2 percent of revenue...reliability (not price per switch) is everything when it comes to the Telcos and CLECs.
Gary Korn
P.S. What happens when/if RAS/RAC takes off again, while core switching is still strong? IF that were to occur, there would be no restraining ASND's stock price. Unfortunately, that is probably as unlikely as a buyout, I guess.
P.P.S. PassPass, do me a favor and shoot me. I'm starting to sound like a damn know-it-all. Yuuck. |
