<<That is why all eyes are on Ascend with it's portfolio of
ip-switches, ras, frame-relay, atm, dial concentrators,
dslam, videoconferencing, firewalls, etc. The great growth
area is not in LANs, not in NICs, not in the edge, but
frankly in the Internet and the Virtual Private Networks
that link groups of people together from across the Internet.
Hence your "LAN" will be the Internet.>>
Exactly! My estimate of the situation in the tech sector is as follows:
The need for speed that has propelled INTC higher over the last 3 years is waning resulting in decreased demand for high end chips. AMD, Cyrx and the sub-$1k PC are putting pressure on low end margins. So INTC is getting squeezed on both the high and low end. INTC will respond to low end pressure by designing low cost MB's and chipsets for the sub $1k market. These MB's will include the modem or NIC. Not good for someone like COMS that depends on modems and NIC's for the bulk of their revenue. However this is good for ASND. Anything that adds internet subscribers is good for ASND.
Oversupply of semiconductors, DRAM, DD's etc. as well as currency problems in Asia will have a negative effect on earnings of semi's, semi equip makers, DRAM co's, disk drive co's. etc. Who will this help? The box builders, consumers, AND EVENTUALLY ASND. Why ASND? The sub-$1k box will finally allow the masses access to a PC. If you look back in my posts, you will find a link to the University of Florida which REQUIRES ownership of a PC and an EMAIL ADDRESS ! Before long everybody is going to have a PC and an email address which means they will be connected to the internet. ADSL and cable modems will speed up access, but when all this new demand comes on line and expects data, voice, and video connections at 3Mbps + the backbone will have to be upgraded big time to support it. If you believe this scenario, then you want to own the purest internet backbone play which IMHO is ASND.
Lastly, how many techs stocks can you find that are 68% off their high for the year, have been downgraded and had est. cut by all the analysts, are in the process of putting in a bottom,and have installed a new CFO with credibility on the street who has just blessed current est. for the current Q and '98 ? No way are they going to mislead investors with a class action suit hanging over their heads because of prior miscommunications. With the huge short interest any good news will cause covering. Buyout ? Definitely someday, further consolidation between networkers, telecoms, and techs in general is on the way. Why? Only by consolidation can over supply be corrected and margins, earnings visibility, investor sentiment etc. be restored. When this will occur is anyone's guess. IMHO the fundamentals and technicals should drive ASND higher, no need for hype or buyout speculation.
Unfortunately, I figured all this out way too soon, and I'm in for 12k at 41. The support at 40 was my downside target. Oops!
Regards,
Lee |
