Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 211.05

-0.7%

Dec 1 3:59 PM EST

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To: Tim Luke who wrote (15187)	9/30/1997 1:26:00 AM
From: Potato Farmer	of 61433

Correct! Do not attempt to "catch the falling knife" too early. There will be a few fair sized sellers cleaning the bad news out of their portfolios before quarter end. The SOES momentum players will short the s*t out of ASND for a few hours. The moment the stock stops trending down they will begin to cover. However it plays out Tuesday it will be exciting. Wednesday will be interesting. Will the funds and the value players seek out this stock? Here's some math. If ASND is now only capable of earning 20 cents a quarter, and is suddenly not growing faster than the overall marketplace, how much is ASND worth to a value player? $15 or 20. Now on a price to sales basis, a not especially fast grower is worth what? Maybe 2x or 3x sales? Sales are about $1.2 billion annually and there are 200 million shares. 3x sales is $18. Book value is $7 or 8, I dunno. Nobody cares about book in this business, forget I said that. Cash is about $2 per share, no LTD. You would do better to buy ANET if you want cash (about $7 per share on a $13 stock). The point of this rambling is that even in the upper $20's, where I think ASND will bottom, it is not a slamdunk for value players. You have to keep going back to the longterm growth story and hope it is still true. I think it is, most of it anyway. Look for future growth of maybe 30%, and a next quarter profit of maybe 35 or 40 cents. Based on those numbers (.35 4 = 1.40 times 30) takes us back up to $42. So if it drops to $28 or less, I'm buying and looking for a 50% profit in a quarter or two. One of my friends is betting he'll get in for $24 or 25. Let's see if I'm right. Pete F. From Tim Luke: "If anyone wants to buy asnd tomorrow I would wait for a few hours of trading to go by before you jump in. Myself I don't recommend buying at all unless you want to day trade the stock."

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