Ascend Communications-News Only!!! (ASND) Message Board

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Technology Stocks : Ascend Communications-News Only!!! (ASND)

ASND 209.15

-1.5%

3:59 PM EST

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To: Sector Investor who wrote (593)	11/25/1997 3:20:00 PM
From: Sector Investor	Read Replies (2) of 1629

Synopsis from Bernstein: 3QWAN PACKET SWITCH SALES DISAPPOINTING Bernstein says that third quarter sales reports support their assertion that ATM WAN packet switch sales will be disappointing. After showing nearly 150% growth in 1996, the last six months have shown significant market deceleration with sales increasing only 3% sequentially in Q2 and 1% sequentially in Q3. They state that Q4 has traditionally been a strong quarter, so they expect a modest rebound to 9% sequential growth, but they remain relatively pessimistic about this market over the long run. Bernstein adds that they do not expect Internet or voice networks to be integrated onto multiservice ATM networks in a meaningful way in 1998, and they remain skeptical about the prospects for telco migration to such fully integrated network architectures in the future. They say that their expectations for modest 25 to 30% average annual growth through 2001 remain unchanged. Specifically, Bernstein comments that Newbridge Networks has managed to keep its ATM WAN revenue increasing through steady share gains. Its Mainstreet 36170 product line had won every major carrier contract awarded in 1997 until Ascend broke the streak by signing a major deal with NTT. This success is manifested in its 24% market share and 13.6% sequential growth in WAN switch sales for its October quarter. With several major contracts expected to be awarded over the next 6 months, Bernstein expects a more competitive playing field. Bernstein comments that Ascend has major new products that match up well with the Newbridge 36170, while Cisco and Nortel have made incremental improvements to their flagship switches which may make them more attractive to carriers. Bernstein expects Newbridge's share to stay level at about 24% yielding EPS well below consensus in FY98 and 99. Bernstein adds that Cisco's WAN packet switch sales account for only 8% of its revenues, so it is much less vulnerable to disappointments in this particular segment. However, Cisco has lost share in each of the last two quarters, falling from 31% to 24%. Cisco has made recent incremental improvements to its flagship BPX multiservice ATM platform that may make it more competitive for future carrier contracts. Specific to ASND, Bernstein mentions that Packet switch sales account for 35% of ASND's revenues, however it is positioned to gain additional market share in the next 2-3 quarters. Ascend has recently added multiservice capability to its CBX500 ATM switch and introduced the GX550 multiservice ATM switch, the first to offer 2.4Gbps OC48 connections. These products are expected to capture an increasing share of carrier contracts for Ascend. Bernstein maintains their Underperform rating on Newbridge Networks and they re-affirm their Market Perform ratings ASND and CSCO.

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