Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 205.50

-1.5%

Dec 5 9:30 AM EST

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To: hpeace who wrote (15041)	9/29/1997 8:13:00 PM
From: craig crawford	of 61433

Dear A$ND followers: Do you remember when Cisco was 50% off it's highs in '94? CSCO came public in Feb '90 at $18 After coming public CSCO reported earnings as follows: Q1 '90 - EPS up 200% Q2 '90 - EPS up 250% Q3 '90 - EPS up 167% Q4 '90 - EPS up 160% (notice the decline for a couple of Q's) Q1 '91 - EPS up 183% Q2 '91 - EPS up 157% Q3 '91 - EPS up 162% Q4 '91 - EPS up 92% (breaking a string of 12 straight triple digit Q's of EPS and Revenue growth) Well we all know now that CSCO's stock kept climbing even with Q4 '91 EPS up only 92%. Now let's jump ahead a few years to May 13, 1994... CSCO reported earnings that Friday. EPS up only 78% from a strong year-ago period, only meeting expectations after beating them for 3 years. CSCO's stock was already down 25%. After their earnings report CSCO declines another 26% in it's worst week ever. Their stock price was cut in half. Analysts declared LAN's had seen the last of their explosive growth. This was amid a tech bear market where leaders fell between 30-50%. (Sound familiar?) It recovered from that bear market and powered ahead. Where is CSCO now? What makes you think Ascend can't do the same? Cisco's recent earnings reports haven't been any better than Ascend's. Cisco reported a 7% sequential revenue increase in it's most recent Q and had a paltry 3% increase the quarter before. Both reports were in-line with estimates. Ascend on the other hand reported 54% higher revenues (skewed by the CSCC acquisition) in it's most recent quarter and 12% sequentially higher the Q before (compared to Cisco's 3%). Cisco's earnings were in line for the last 2 Q's and Ascend was in line last Q and .02-.03 above the quarter before. The only reason why Cisco has fared better in this bear market for networkers is it's larger and more entrenched than smaller companies like Ascend. ...................Revenues in Millions and % sequential growth .........................ASCEND.............CISCO Last Q.............$311.7 (54%)........$1765.1 (7%) Prior Q.............$202.4 (12%)........$1647.9 (3%) Prior Q.............$177.5 (13%)........$1592.4 (11%) Prior Q.............$154.6 (25%)........$1434.8 (11%) << There are major issues with ASND >> Only short-term issues. Long term prospects remain excellent. Do you know that Dell lost money in '94 due to a $40 million charge for a failed notebook line? In 1990 Dell's profits dropped 64% due to rising costs and over-supply issues. Do you realize that DELL peaked in early 1993 and didn't make new highs until well into 1995? (over 2 years) Where is DELL now? Let's move on to Intel. They had to take a $475 million charge in late '94 for faulty Pentiums, causing them to report lower net income in '94 compared to '93. Intel's stock price NEVER eclipsed the high set in '93 (74.25 pre-split) until 1995. Furthermore Intel has had some really bad earnings reports. Remember back in Jan of '96? Let me refresh the memory of those who don't. This was the report from Briefing and headlines of some newspapers on Jan 17, 1996. INTEL CORP. (INTC) 55 3/4 CLOSE. Company reported 4th qtr earnings of $0.98 a share, below market consensus of $1.09 a share. Last year, earnings were $0.43 a share. Gross margins declined to 48% from the 52% level. Revenues climbed to $4.6B and 1st qtr 1996 earnings are seen to be flat. INTEL TO SLOW SPENDING AFTER WOEFUL 4TH-QUARTER GAINS INTEL PROFITS DISAPPOINT WALL STREET INTEL RESULTS FALL SHORT OF WALL STREET'S FORECASTS INTEL EARNINGS FALL FAR SHORT OF EXPECTATIONS Intel only earned $2 million in 1985. They lost money in 1986. Intel earned less money in 1989 than they did in 1988. Intel has dissapointed the street 5 times in the last 4 years. Intel fell 33% just from Oct 95 to Jan '96. Where is INTC now? On July 18, 1995 Microsoft warned of slower growth and it's stock tumbled as much as 11% that day. Operating profit had grown only 4% in the latest quarter. It was down 27% the next 2 months. Does anyone remember Rick Sherlund of Goldman Sachs? He helped bring Microsoft public and had touted MSFT for a decade. In Nov '96 he downgraded MSFT from "buy" to "moderately outperform" and replaced MSFT with NSCP on the recommended list. Microsoft lost billions of market cap while NSCP and SUNW gained billions. Where is MSFT now? I'm not going to even go into detail about how AMAT recovered from the low twenties to triple digits this year. I think that is fresh in everyone's mind. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The '97 bear market in networkers afforded investors a tremendous opportunity to buy C$CO in the 40's. Due to the smaller size of A$ND and the slight indigestion caused by the $3.7 billion acquisition of Cascade, the market is presenting a "golden opportunity" for investors with the foresight to overlook short-term isssues related to A$ND. The fundamentals for a return to "explosive growth" are in place. A$ND has NTT (The world's largest phone company with $70 billion in sales) and UUNET (the world's largest largest ISP) firmly entrenched on their side. It looks so crystal clear to me. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Now. Notice the shortfall of INTC on 1/17/96. Now look at this chart from around that time period. The bottom was the day that the bad news came out. A$ND may not be Intel but it shows that you never know how well the street will take the news at heavily discounted prices. 209.31.31.89

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