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Technology Stocks : Ascend Communications (ASND)

ASND 212.33

+1.1%

Nov 28 9:30 AM EST

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To: Tom Hays who wrote (7984)	8/5/1997 1:01:00 PM
From: Sector Investor	of 61433

12:40pm EDT 5-Aug-97 UBS Securities (Nikos Theodosopoulos (212) 821-695) ASND UBS SECURITIES EQUITY RESEARCH August 05,1997 Nikos Theodosopoulos (212) 821-6951 Anton Wahlman (212) 821-3675 Scott Heritage (212) 821-6828 ASCEND COMMUNICATIONS (ASND-OTC) ASND: UPDATE ON ASCEND RATING HOLD ______________________________________________________________________________ Price 53.94 \| EPS P/E 52 Week 80.25-36.13 \| 12/1996A 0.99 54.5 Dividend Nil \| 12/1997E 1.37 39.4 Yield Nil \| 12/1998E 1.90 28.4 Shs. Out 129.5 Mil. \| Market Cap. 7.0 Bil. \| ______________________________________________________________________________ * Believe that Cisco has displaced Ascend as leading vendor of remote access concentrator equipment at US WEST * Believe strength in Cascade in Japan may partially be due to new low cost ATM service offered by NTT * Also, Cascade business could be benefiting from processor upgrades on installed base of 9000 frame relay switches Increased Competition In Remote Access Market We believe, based on discussions with industry contacts, that Cisco (CSCO-$82 NR) has displaced or will be displacing Ascend as the primary supplier of remote access concentrator equipment for dial-up services within the US WEST account. We believe this is a reflection of increasing competition in the remote access market, although the overall market is still showing solid growth. We believe in this particular case, Cisco was able to leverage its new AccessPath remote access concentrator as well as a migration path to a higher density and increased functionality product in the future. We believe that this is also a reflection of increased focus by Cisco on the carrier market. A recent example of such focus was a contract with GTE for carrier networking equipment. We believe Cisco is close to winning other dial-up contracts with this AccessPath product. New Low Cost ATM Service May Be Helping Cascade Business In Japan In a recent analyst meeting, Ascend indicated that business for Cascade has been picking up in Japan. While this is probably mostly due to increased Frame Relay business in Japan with NTT and a new carrier win in Japan, we also believe there may be some correlation with a new low cost ATM service offered by NTT. Specifically, last month ATM Megalink service from NTT was launched. This service is priced much lower than the existing leased line service from NTT. Early research by UBS indicates that companies are evaluating to switch from TDM leased line service to ATM. This should accelerate the ATM switch market as well as the ATM access market; markets that Ascend participates with products acquired from Cascade. In addition, we also are hearing from the field that processor upgrades on the Cascade 9000 frame relay switch may also be benefiting Cascade's business. These processor upgrades are not cheap and are necessary for new feature enhancements on the Cascade 9000 product. UBS Securities LLC makes a market in this security. First Call Corporation - all rights reserved. 617/345-2500 END OF NOTE FCviaNewsEDGE BROKER: UBS Securities :TICKER: ASND CSCO :SUBJECT: TLLD HARD CONW USA Copyright (c) 1997 First Call Research Notes Received by NewsEDGE/LAN: 8/5/97 11:40 AM

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