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Technology Stocks : Ascend Communications (ASND)

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To: J. Stone who wrote (8514)	8/11/1997 4:50:00 PM
From: Sector Investor	of 61433

ASCEND COMMUNICATIONS: Some Concern Regarding July Revenues 04:28pm EDT 11-Aug-97 DLJ Securities (Stephen G. Koffler) ASND DLJ **** DONALDSON, LUFKIN & JENRETTE **** DLJ August 11, 1997 Stephen G. Koffler (212) 892-4203 Peter Giglio (212) 892-8946 ASCEND COMMUNICATIONS (ASND: $44.5) * Some Concern Regarding July Revenues Range: Earnings Per Share 1997 vs 1996 % Chg 80-36 Old New P/E Ratios F1QA $0.31 vs 0.17 +82% (FY:Dec.) 1998E $1.85 $ 24.1 F2QA 0.31 vs 0.24 +29% 1997E 1.36 32.7 F3Q 0.36 vs 0.29 +24% 1996A 1.00 44.5 F4Q 0.38 vs 0.32 +19% Yield: % Market Cap.: $10.6 Billion 5-Yr. Growth Rate: 35% Dividend: $ Avg. Trading Vol.(000): 6200 Book Value: $4.18 RATING: Buy Change: None 12-Mo. Target: $60 INVESTMENT SUMMARY: We are a little disappointed at the revenue numbers reported by Ascend as part of an interim 8-K filing with the SEC. The interim filing presented revenues for July of $63 million and represents 18.5% of quarterly revenue estimates. Our revenue and EPS estimates for the third quarter, ending in September, are $340 million and $0.36/share respectively. Causal factors contributing to the weaker than expected July may include: The combined Ascend/Cascade sales forces being out of commission for 3 - 5 days related to cross training on the Ascend and Cascade product lines and the nature of the Cascade business being more back-end loaded. As with all data networking companies, the vacation oriented August is always challenging -- especially in Europe. With the limited information we have at this early stage of the quarter, we view our EPS estimate of $0.36 a little bit at risk. Our rating for Ascend is Buy. * DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION OR AN AFFILIATE MAKES A MARKET IN THIS SECURITY AND HAS PERIODIC POSITIONS IN THIS SECURITY IN CONNECTION WITH THIS ACTIVITY. c Donaldson, Lufkin & Jenrette Securities Corporation, 1997 Additional information is available upon request. First Call Corporation - all rights reserved. 617/345-2500 END OF NOTE FCviaNewsEDGE BROKER: DLJ Securities :TICKER: ASND :SUBJECT: TLLD HARD CONW USA Copyright (c) 1997 First Call Research Notes Received by NewsEDGE/LAN: 8/11/97 3:29 PM

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