BN 11/4 Ascend CFO Says Company Will Meet Earnings Estimates
(Update1)
Ascend CFO Says Company Will Meet Earnings Estimates (Update1)
(Updates with closing stock price.)
San Diego, Nov. 4 (Bloomberg) -- Ascend Communications
Inc.'s new chief financial officer, Michael Ashby, said the
company will meet earnings estimates this quarter and next year
as it cuts expenses and lowers prices.
Ascend, a maker of computer network equipment, reported its
profit declined in the third quarter, breaking a string of more
than a dozen straight quarters of record earnings. The decline
came after technical problems delayed shipments of its products
in the second quarter and international sales slumped.
''The company will be able to maintain its (profit) margins
through both cost reductions and changing the discount levels
that are offered to some of their major customers,'' said Ashby,
48, who was hired on Friday.
Shares of Alameda, California-based Ascend, a maker of
computer network equipment, are down 69 percent since peaking at
80 1/4 on Jan. 23, with lost market value exceeding $10 billion.
In today's trading, Ascend fell as much as 6 percent to 24 11/16,
a new 52-week low, before closing down 1 at 25 5/16.
Ashby said he expects the company to meet analyst estimates
of 23 cents a share in the current quarter, which ends Dec. 31,
on revenue of $280 million to $290 million.
The company plans to lower ''street'' prices for its
products by about 10 percent in the first half of 1998, Ashby
said, and he expects to meet estimates of $1.15 to $1.20 a share
in earnings next year.
For the first nine months of the year, Ascend lost $172
million, or 92 cents a share, compared to a profit of $119.4
million, or 61 cents, in the year-earlier period. The loss
included acquisition charges of $18 million for its purchase in
the first quarter of InterCon Systems Corp. and $11.3 million in
the second quarter for buying Cascade Communications Corp. and
Whitetree Inc. Revenue increased 45 percent to $874.8 million
from $602.5 million.
Ashby said gross profit margins are now targeted at 62
percent to 64 percent for 1998, down slightly from the company's
historic 65 percent margin level. The gross margin is the
percentage of sales remaining after deducting the cost of goods
sold.
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