HAMBRECHT & QUIST CONFERENCE (continued)
(courtesy of Dennis R. Duke)
Breakout Session
Q: What is happening in WDM? Fill us in more
A: Ascend will announce more plans during SuperComm, including delaings with Ciena
(what and when is SuperComm?)
Q: Why do carriers want ATM over SONET?
A: Quality of Service.
Q: Why SONET?
A: Bandwidth efficency
There was some discussion of the 500, the 550, GRF's, IP Navigator, MPLS standard
and frankly I did not hear what was about.
Q: Explain your to be announced VPN strategy?
A: We will announce at IPCOM (The upcoming conference) our VPN strategy. Which
will include VPN, PVC and working with carriers to provide service.
Q: When will we see OC-48?
A: Sometime later this year.
Q: What is Lucent planning with Yurie?
A: We can't figure out what they will do with Yurie. We can't figure out why they bought
it. Michael added it sure give this industry a greater value.
Q: Please provide some numbers about international sales breakout and reconcile to
growth rate for the company?
A: Michael reported that 32% of 98 sales and 40% of 99 should come from
international business. Given the last Q was 27%, you can calculate the growth rate and
it will be faster than the U.S. growth rate. (When pressed on the reconcilation to
estimate they quickly put the calculation responsibility on the audience. More on this
topic later.)
Q: What is grow faster Access or Core Switching?
A: (You know this from the CC.) Michael reported that Core Switching will pass
Access before year end and will be over 50% of 98 revenue.
Q: Japan
A: Flat Q1 to Q2 (Remember it was expected in the CC that Japan would be 5% as I
recall. Here again this is an upside surprise, so not giving pward guidance is preceived
as negative. I just think they are being conservative.)
Q: In the session downstairs you indicated RFPs were strong in Europe. What about the
rest of the world?
A: We are seeing RFPs from all over the world, Latin American, Asia and Europe.
Q: Are the RFPs focusing on only ATM?
A: No, we are more and more offering system solutions with FR, and other componets.
Q: Status and growth of DSLTNT?
A: We saw good growth last Q. We are in the uptake of DSL technology to CLEC and
many backbone Carriers, and have many trials currently underway.
Alcatel is pressuring prices in this area, and ADSL is winning as a platform versus
SDSL.
Q: Are the Core Switching oppotunities Williams sized deals?
A: We are seeing a lot of RFPs in the $10 and $25 million ranges, but it must be
remembered that we delivery many of these contracts over many quarters.
Q: Tell us more about the international expansion and what currency effects that might
have?
A: Michael reported that ASND does not deal in foreign currency and all products
going abroad are shipped from U.S. in U.S. Dollars. Thus Ascend does not bear any
currency risk. There was more discussion about growth rates accelerating in
international for the remainder of the year. Also China is the number 2 foreign subsidiary
now. We are looking for a rebound in Asia in second half.
Q: Wat are you forcasting for growth rates?
A: Michael, Remote Access 10 to 20%, Core Switching 20 to 30%. (Estimate sounds
low.)
Q: Port Pricing issue?
A: Seems to be stabilized.
Q: Comment on the win ratio?
A: I am very Bullish. We have won on Qwest agaisnt Cisco, LCI agaisnt NN, etc. We
do not see Cisco/Stratacom much. Nortel is getting a little stronger.
Bidding on Level III could go either to Ascend or Fore. Fore's low cost could give them
a shot.
Q: A question about bank financing of business needs
A: Mory said we have $600,000,000, on the Balance Sheet. Michael discussed the
leasing company. It is on Balance Sheet, but revenue is not recognizied until delivered
and paid for. It is carriered as Deferred Income.
To be competitive the company is willing to give terms over gross margin reductions.
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