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Technology Stocks : Ascend Communications (ASND)
ASND 210.01+1.7%Nov 26 3:59 PM EST
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To: gbh who wrote (48684)6/15/1998 12:03:00 PM
From: Knighty Tin   of 61433
 
Gary, The simple reason Ascend is not a good value at $55 is called competition. Competition eats profit margins. Ascend has already seen this in the past. They can compete, but the cost of constantly staying ahead of the technology curve and fending off the Ciscos of the world is making this more and more of a commodity industry. We are not there, yet, but any return to the heady days of 1995 is unthinkable. As such, this stock is certainly overpriced at its current pe ratio of more than 40, and will be so even if they get a couple of quarters that are up slightly. They simply do not have the growth potential to fulfill that type of market valuation.

When the stock falls into the low 30s and 20s, then we start getting to an area where it is a decent buy.

Right now, there are two perceptions. The current ruling one is that this has been a short-term correction and that Ascend will return to its former glory. Not going to happen in the real business world.

The previous perception, when the stock was at $25 or lower, was that Ascend was being ground into the dust and might never see another up quarter. That is also not happening, at least not yet.

The reality is between these two extremes.

MB
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