January 20, 1998, TechInvestor
Ascend, Bay Networks Report Strong
Earnings
Gabrielle Jonas
Networking companies Ascend and Bay Networks topped Wall Street estimates
Tuesday with strong earnings.
Ascend Communications reported fourth quarter earnings of $47.6 million, or 24
cents a share, to beat analysts' expectations by two pennies. The earnings grew
sequentially 19 percent over the preceding quarter.
Ascend ASND earnings follow a host of upgrades from analysts. The networking
company was upgraded by Gerard Klauer from a hold to a buy Tuesday. And late
last week, BancAmerica Robertson Stephens upgraded the shares from a
long-term attractive to a buy. Earlier last week, Salomon Smith Barney upgraded
the shares from a neutral to a buy.
The earnings represented a 26 percent decrease versus net income of $64.5
million or 32 cents per share in the year-ago quarter.
Ascend reported fourth quarter revenue of $292.5 million, an 8 percent sequential
growth in net sales over the preceding quarter and a 2 percent increase over net
sales of $287.8 million in the year-ago quarter.
Michael Cristinziano, the analyst with Gerard Klauer Madison who had upgraded
the shares of Ascend earlier Tuesday, told TechInvestor that he upgraded Ascend
because the company's managed to hold onto important customers and acquire
new customers. "That was quite an accomplishment, attributable to management
whose ability was questioned," he said.
Mory Ejabat, president and CEO of Ascend said he was pleased with the quarter's
sequential growth "in spite of weakness in key Asia Pacific markets." China saw
strong quarter-over-quarter growth, he said.
The quarter also saw an "acceleration" of Ascend's ATM business, Ejabat said.
"We have seen our ATM products gain broad market acceptance as ATM
continues to emerge as the backbone technology of choice," he said.
For the year, net sales were $1.2 billion, a 31 percent increase over net sales of
$890.3 million in 1996. Net income for 1997 was $211.2 million or $1.06 per
share, before the effect of one-time charges related to purchased research and
development and costs of mergers. Combined, these charges reduced net income
by $335.5 million for the year.
Excluding these one-time charges, results for 1997 are an 8 percent increase over
net income of $195.1 million or 99 cents per share.
Bay Networks on Tuesday reported operating earnings for its second quarter
ended Dec. 27 were $59.5 million, or 27 cents a share, compared with a loss of
$172.9 million, or 90 cents a share last year.
Wall Street was expecting earnings of 26 cents a share.
Counting a $12 million charge, Bay reported earnings of $47.5 million, or 22 cents
a share. The results equaled the earnings reported in the same quarter a year ago.
Bay reported revenue of $644.9 million, an increase of 25.3 percent from the
corresponding quarter of the prior year.
"We are very pleased with these results, especially with the 7.3 percent sequential
revenue growth we achieved over our first quarter performance," said David
House, Bay's chairman, president and CEO. "Our switching business recorded the
highest growth rate and, as a result, is now the largest source of revenue for Bay
Networks."
At market close, Ascend ASND was up 11/16, to 30 3/4. Bay BAY was up 1
5/16, to 29 7/16. |
