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Technology Stocks : Ascend Communications (ASND)
ASND 212.50+1.5%Dec 24 12:59 PM EST
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To: Eric E who wrote (39283)3/15/1998 10:52:00 PM
From: Gary Korn  Read Replies (1) of 61433
 
Should we be concerned about a possible correction at this time?

Eric,

A correction is always possible, but there are some positives vis-a-vis ASND:

ASND has been tracking the Nasdaq composite index very closely since February 13. See #chart-asnd I think this is because there currently is nothing about ASND's revenue -- positive or negative -- that would cause it to stand out from the pack.

Consequently, if the NASD were to correct by 10%, I would expect ASND to correct 10% as well. That would mean a drop from 35 to 31.5 At least there is no indication that ASND would "over" correct. If you've got to park your capital somewhere (other than in cash), this seems to be a good thing.

After 1Q earnings, ASND has a decent chance of rising faster than the NASD composite. That is because it will be closer to the double-digit sequential revenue growth predicted by ASND management for 2H98. It is this prospect -- that the market may soon inflate ASND's p.e. (and stock price) in anticipation of a greater growth rate -- that would tend to keep me invested in ASND. (Even so, I have more in cash now than I did back in January given that the market has come so far so fast.)

Gary Korn
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