Some thoughts on how the numbers are twisted:
The following is from a Bloomberg article praising CSCO and criticizing other networkers (except BAY):
Ascend said earlier this month that it expected fourth-
quarter earnings to meet estimates of 23 cents a share, the
average of 27 analysts. Ascend expects slower sales in Asia,
although it said that won't hurt earnings.
In the year-earlier quarter, Ascend reported earnings of
$41.1 million, or 32 cents a share, on sales of $177.5 million.
The company has been struggling with product problems and lower
earnings. Ascend has missed estimates for the past two quarters.
4th-Qtr Year-Ago Number of
Company Estimate Earnings Analysts
Bay Networks* $0.25 $(0.90) 28
Cabletron= 0.16 0.39 18
Cisco# 0.63 0.49 36
3Com+ 0.25 0.47 30
Ascend 0.23 0.32 26
*Fiscal second-quarter ending Dec. 31
=Fiscal fourth-quarter ending Feb. 28
#Fiscal second-quarter ending Jan. 30
+Fiscal third-quarter ending Feb. 28
Estimates provided by IBES International Inc.
Now, the article notes that ASND earned $41.1MM last year on earnings of .32 per share. But that ASND will only earn .23 per share this year.
Last year, ASND must have had fewer shares: 41.1MM earnings divided by .32/share = 128.4MM shares. (I suppose additional shares were authorized/issued for the CSCC purchase)
This year, we know that ASND has 200MM shares. If ASND earns .23/share, we are talking about total earnings of .23 * 200MM = $46MM. If ASND does indeed earn $46MM (which is .23/share), then that is an increase of 11.9% over the $41.1MM earnings for 4Q96 reported by Bloomberg.
This is not apples to apples, however, because ASND now includes CSCC.
Indeed, CSCC should have contributed from 10MM to 20 MM in earnings per quarter, based on its own past 10Qs...therefore, the combination is indeed performing worse earnings-wise than the separate parts had performed....but enough to justify the new stock price?
Can anyone find 4Q96 earnings for CSCC? I found 1Q96 of 10.4MM, 2Q96 of 16.7MM and 3Q96 of 20.2MM. I need 4Q96. It may have been as high as 40MM (as I read the 10K, but I may be mistaken).
Gary Korn |
