Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 220.42

+4.9%

Dec 12 9:30 AM EST

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To: Sector Investor who wrote (14343)	9/25/1997 2:07:00 PM
From: Maverick	of 61433

Hi Sector. We appreciate your contribution to the thread. The NTT was well known last month but ASND held that card close to its vest w/o announcing until 9/16. The NTT contract is spread out over 3 yrs. The UUnet deal was originally expected in 1Q98 but somehow ASND was able to corral UUnet to move it 1 qtr ahead although UUnet might also need some additional MAX TNT too. This contract will spread out over 3 months. Usually in the NW business, the customer doesn't pay a lump sum at the beginning or the end of a contract. Instead, customers pay according to an installment plan where it is divided in phases and customers pay after equipments are shipped, installed, configured, and verified working correctly. ASND has a conservative booking practice unlike IFMX which counts as rev. when it ships products to distributors before its products get to its end customers. Thus, about 1/4 of UUnet contract will be recognzed late in Sept and probably a very small % of NTT contract, if at all, will be realized given that there is so much red tape in exporting equipments to a strict-rule country like Japan. Let there be no doubt that ASND is still in the dog house for this qtr. It looks like ASND will not meet a sequentially flat rev of $311.7 MM. Remember that the CSCC acquisition is still somewhat diluted for 2 cos. haven't fully merged in terms of operations yet. Furthermore, ASND has had to offer steep discount to move the equipments in the last frantic 2 months. ASND tried to make this qtr respectable in the last few days but there is no way it will meet the $311.7 MM rev. The question now is how much does it fall short of the consensus estimate of $0.31 (or $0.32 depending on First Call or Zacks) ? Right now my most optimistic estimate with latest contracts and investment interests taken into account is $0.29 which is still 2 pennies shy. You can guess the consequence unless the consensus EPS estimate is lowered to $0.29.

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