Synopsis from Morgan Stanley RE: RAS Market Share Numbers
MS says that Access concentrator sales in 3Q/97 were about $453
million, whic was down 3% sequentially according to The Dell'Oro
Group's estimates released yesterday. Industry sales increased
26% year-over-year, but were negatively impacted by weak results
at ASND.
Per Dell'Oro, COMS gained 8 percentage points of market share to
43%, with Ascend losing 8 percentage points of share to 29%.
CSCO gained about 1 percentage point to 15% and Bay remained flat
at about 1%.
MS believes that ASND's market share will stabilize within the
next couple of quarters as it resolves product issues on its MAX
TNT concentrator. MS says that they believe some customers
(especially International) delayed orders from Ascend in 3Q,
resulting in lower industry growth as well as lower market share
for ASND.
MS adds that until Ascend's product issues are resolved, 3Com and
Cisco appear to be taking advantage of a window of opportunity.
MS comments that these estimates appear to be somewhat distorted,
however, given the adjustments that the Dell'Oro Group
has made to account for 56K upgrades, which in the case of Ascend
and Cisco reflect mainly hardware upgrades, and in the case of
3Com, reflect mainly software upgrades. They say that these
adjustments appear to have created one-time fluctuations in the
results, and the trends from 2Q to 3Q may not reflect a long-term
trend. MS expects 4Q's market share numbers would be more
meaningful in this regard, with the expectation that most of the
modems shipped will be software upgradeable to 56K and upgrade
ports will be an insignificant fraction of total ports shipped,
resulting in less distortion to the estimates.
MS provides a table that looked something like this:
3rd Quarter 1997 Access Concentrator Sales and Market Share
3Q/97 2Q/97 % Change
Sales % Share Sales % Share (Sales)
ASND $131.3 29.0% $169.9 36.5% (22.7%)
COMS 195.4 43.2 163.0 35.0 19.9
CSCO 67.7 14.9 66.2 14.2 2.3
BAY 5.9 1.3 6.6 1.4 (10.6)
Other 52.4 11.6 60.5 12.9 (13.4)
TOTAL 452.7 100.0 466.2 100.0 (2.9)
Original Source was Dell'Oro Group
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Sector's comment. I agree with the statement that Q3 may be an
anomaly due to Europe 56K TNT problems. Until we see 4Q numbers
(first earnings and CC than Dell'Oro numbers in late February,
ASND's market perception may not fully recover. I fully expect to
see the market share reverse back to ASND's favor, due to X2
problems and the resolution of TNT problems. We may not see $40
until February unless a buyout (unlikely, IMO) occurs. However,
I'm still very bullish (pricewise) for mid-1998 and onward.
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