Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 210.01

+1.7%

Nov 26 3:59 PM EST

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To: Joseph Pareti who wrote (23995)	11/19/1997 6:37:00 AM
From: Inga	Read Replies (3) of 61433

The numbers and computations you got from Ray Smith are misleading. A company can command a high P/E ratio if it can sustain growth rate predictably year after year in terms of revenues and net income whether computed quarterly or annually. The following is ASND 5-year fundamentals. Note the () for 1997 since we do not have the results of the December quarter yet. The revenue and net income are included here for the last 9 months only. Actual annual results are of course higher. Note the progressive improvements in both % change of revenues and net incomes. I do not see any major deviations from the 5-year fundamentals. Your computed EPS growth is misleading since the number of shares have been increased due to stock split, new issuance, etc. You should do the following comparison to 5-year fundamentals of INTC, SUNW, COMS and it will be obvious that ASND is a very aggressive growth company. I might say that other companies like INTC may look tame and command a much higher P/E ratio. The growth rate should be averaged on quarterly revenue, net income, and quarterly eps and it should be about 10%-15% quarter to quarter hence the growth rate of 40-65% anually and therefore a P/E of (40-60). The price shock ASND is suffering right now is due to the first-time ever shortfall of quarterly revenue. However, ASND has not lost money in any quarter (excluding CSCC merger cost). (in mm) 12mos(3) 1996 1995 1994 1993 Revenues 962.0 549.3 149.6 39.3 16.2 Revenue % Chg -- 267 281 143 -- Net Income 67.8 113.1 30.6 8.7 1.3 E.P.S. .53 .89 .28 .10 .02 E.P.S.% Chg -- 218 180 400 -- Shares (mm) 199 120 110 95 74 Good luck. I am not a bull but impatient neutral. Lanny Dao

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