News.com. Ascend beats estimates
news.com
By Ben Heskett
Staff Writer, CNET NEWS.COM
July 15, 1998, 9:20 a.m. PT
update Shares of Ascend Communications were
up in morning trading following a positive earnings
announcement and an upgrade in estimates from a
Wall Street brokerage.
Ascend posted net income
of $59.1 million, or 29
cents a share, compared
with a net loss of $48.8
million, or 26 cents a
share, for the same period
a year ago.
Today's earnings results beat analysts' expectations
for the quarter by a single cent, according to First
Call. Today's report represents the third
consecutive quarter that Ascend has eked out
profits just above Street estimates.
Revenues for the quarter were $327.4 million,
compared with sales of $311.7 million for the same
period last year.
The numbers reflect a 7.3 percent increase in
sequential quarterly sales growth and a 12.8
percent increase in sequential income growth.
Ascend has shown signs of recovery following a
tumultuous period in the aftermath of its merger
with Cascade Communications last year, which is
the largest reason for fiscal 1997's quarterly loss.
The company also is one of several firms that has
suffered from a general downturn in the networking
sector in recent quarters.
"I am pleased with our second-quarter
performance, attaining record revenues for the
quarter," Mory Ejabat, president and chief
executive officer of Ascend, said in a statement. "In
addition, we showed good growth in our
international markets and we were able to bring to
market key products and services.
"Our ability to show continued sequential growth
over the last three quarters is, I believe, an
indication of the strength of our organization and the
success we are having delivering the products and
services that network service providers worldwide
require," Ejabat added.
The executive said that the Asia Pacific and Japan
regions post particular challenges for the company.
Ascend's networking equipment is used to connect
geographically disperse sites and service providers
using high-speed networking technology. The firm
has created a niche for itself by selling its gear into
various service provider accounts and continues to
fend off various challengers in the hotly contested
remote access hardware market.
The company's stock was up around 3 percent in
morning trading, boosted, in part, by a favorable
estimate upgrade from Morgan Stanley Dean
Witter. The rise came after a downturn in advance
of Ascend's earnings announcement.
The brokerage raised estimates for Ascend's 1998
fiscal year from $1.18 to $1.20 a share, and raised
its fiscal 1999 estimates from $1.50 to $1.60 a
share. It also upped its price target for the stock
from $55 to $60 a share.
Ascend has been rumored to be an acquisition
target for a larger telecommunications firm.
Ericsson is one possible suitor that has been named
often. The company is said to be in acquisition
mode itself, however, with Advanced Fibre
Communications rumored to be a target. Shares of
Advanced Fibre have traded in heavy volume
during recent days amid the speculation.
Ejabat denied that there were any talks with
Advanced Fibre Communications during
yesterday's earnings conference call.
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