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Technology Stocks : Cascade Communications (CSCC)

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To: Bill Gerring who wrote (3361)	4/2/1997 4:59:00 AM
From: Heg Heg	of 3743

To ALL: INFRASTRUCTURE comments further on merger: some excerpts: ............Robert Stephens & Co. analyst Paul Johnson went as far as to say that in the long-term, the deal was a "brilliant" move. Ascend shareholders maynot like this view today, but we happen to agree with Mr. Johnson...... ........ We believe that on a stock-by-stock basis, downside risk remains but for the long-term investor, nibbling today will almost certainly prove to be quite rewarding twelve months from now. But the key will be buying companies that are fundamentally sound with respect to their business model, market position and core technology -- and the Cascade/Ascend combination qualifies. ........ ....synergy. They touched on the strong fit between Ascend's fast router - the GRF 400 - and Cascade's ATM and Frame Relay switches and the quality of service (QoS) attainable across the network with a remote access presence that few competitors will be able to match any time soon. The Cascade product line will likely reap synergies from Ascend's strong international presence, where Cascade has traditionally been week. Roughly 48 percent of Ascend's 1996 revenues were international while Cascade only had 17 percent in international sales. Furthermore, about 13 percent of Ascend's sales were derived from Regional Bell Operating Companies (RBOCs) so limited overlap exists with one of Cascade's strong customer bases. ........ .... The RBOCs are known for their step-function capital outlays and the implication of Mr. Smith's view meshes with what we have already written about - our believe that another wave of investment will come this year........ The question on how the companies plan to handle the overlap in their remote access product lines remains unanswered, which suggests that serious merger discussions probably began relatively recently. ....Next month, Ascend plans to introduce carrier-amplitude phase (CAP) modulation ADSL based on Globspan chipsets and later in the second quarter, discrete-multitone (DMT) modulation ADSL based on Aware/Analog Devices chipsets. Ascend has been more aggressive in bring Digital Subscriber Line technology to carriers for trials and their remote access strength has rested more strongly in the ISP carrier market. Although the AX 1600 and AX 800 are relatively new to the marketplace, it is proable that they will be market along with the MAX family, with each family targeted to match specific customer needs. .......Bringing best-of-breed technologies under one company is a powerful strategy to address customer demands today and it is clear that the combined company will stand stronger. INFRASTRUCTURE gives free trial subscriptions for those who email a request to infras@aol.com

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