Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 203.85

-3.4%

2:06 PM EST

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To: Darren who wrote (47724)	5/29/1998 7:45:00 AM
From: gbh	of 61433

If ASND were priced in the current market relative to CSCO, it would trade at a share price of $36 1/2. That assumes that they will be a penny over earnings estimates as they have been over the last three quarters. Any downside surprise, and we all know what happens. Then why do think 40 will be cheap? The obvious answer (I'm not saying its the right one) to the CSCO question is that the street believes ASND will grow at a faster rate than CSCO, plus there is a built-in takeover premium (BTW I think this is gone now). But as far as growing faster than CSCO, this is not reflected in the current analyst estimates. These analyst have been burned before and aren't willing to publish the earnings estimate numbers that would justify the price. But the fact that the BUY ratings keeps coming in reflect that they believe management is playing the game conservatively now (unlike last year). Remember that these guys actually talk to management, some very often. When they stop being comfortable, we'll know it. Thats when you'll see <40. And thats when I feel you (and I) won't want the stock any more. Also you are correct about a down quarter. It would be death. But this is not unique to ASND. CSCO would face the same wrath. And this sandbagging can't last forever. Look for this quarter to exceed by more than 1 penny. It will have to to keep the price up. As far as exceeding CSCO growth, this will have to come from Core Switching. RAS/RAC will also be much healthier this quarter. And we may even be surprised by the SA line. Make no mistake about it, the internet buildout is moving ahead, and ASND is even better positioned than CSCO to take advantage of it. The carriers are spending and ASND is stronger than CSCO here. Re: 7.7% and Dillon Read; If the analysts/brokerages really thought the company was growing at 7%, it would already be a $20 stock, and Dillon Read maintains its BUY rating. They would be at HOLD or SELL if they really thought the potential was $45 in 12 months. They're hedging and gutless. :) Gary

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