Pat , below you will find the article from Bloomberg, according which ASND receant contract with Bell Atlanthic is worth 50-100 mil $.This is rather small compare with NN deal with SBC worth over 300 mil$.Looks to me that there is some room for NN to get some extra ravenue from Bell Alantic besides they sell currently to former Nynex.
Regards
Zbyslaw
Sept. 21 (Bloomberg) -- Cisco Systems Inc. and Ascend Communications Inc. will report higher
third-quarter earnings on strong sales to phone companies, while other big computer- networking
rivals were hurt by slowing demand and price cuts in the corporate market.
Earnings at 3Com Corp. will be sharply lower as the No. 2 maker of networking equipment
slashed prices on its inexpensive equipment. Slowing sales of No. 3 Cabletron Systems Inc.'s
older gear cut into its profit.
No. 5 Ascend is benefiting as Internet providers and phone companies buy its switches to combine
voice and data on their networks. No. 1 Cisco also is pushing into the telecommunications market,
while enjoying wide profit margins on the expensive routers and other Internet products it sells to
large businesses. ''Cisco has won the local area network (corporate) market. Now the action is in
the telecom market,'' said Patrick Houghton, a Wheat First Union analyst, who rates Cisco
''buy.''
Sales of Internet equipment to phone companies and Internet service providers are expected to
reach more than $50 billion annually by 2002.
Cisco's profit is expected to rise to a split-adjusted 33 cents a share in its first fiscal quarter ending
in October, up from 26 cents in the year-ago period, according to First Call Corp. The company's
stock split 3 for 2 last week.
Ascend Rising
Ascend is winning a number of large contracts from local phone companies and Internet service
providers, including a three- year agreement with Bell Atlantic Corp. valued at $50 million to $100
million.
The company's powerful asynchronous transfer mode, or ATM, switches it acquired from Cascade
Communications Corp. last year are in demand by telecommunications companies looking to
unclog Internet bottlenecks.
Ascend also has strong ties to its Internet customers thanks to sales of its remote-access
concentrators, which route incoming Internet calls.
The company will earn 31 cents a share in the quarter ending in September, according to First Call,
up from 20 cents a year ago. It will be Ascend's fifth straight quarter of earnings growth. ''Ascend
has gotten most of the important (contract) wins this quarter'' from phone companies, said Craig
Johnson, an analyst with market researcher Pita Group in Portland, Oregon.
Ascend bolstered the product line it sells to telecommunications carriers when it agreed to buy
Stratus Computer Inc. for $948 million in stock. The purchase, announced in August, is expected
to close in late September.
Cabletron, 3Com
Earnings at 3Com are expected to be 20 cents a share, less than half the 47 cents earned in the
year-earlier period. For 3Com, it will be the fourth straight quarter of steep declines since it bought
modem-maker US Robotics Corp. in June 1997.
The company, which was hurt earlier this year by stiff price cuts on its telephone-based modems
and PC connector cards, is looking to increased modem sales to improve profit. ''The pickup in the
modem business could be the start of the turnaround,'' said Paul Weinstein, an analyst with CS
First Boston who rates 3Com ''strong buy.''
Although modem sales usually increase because of back-to- school and holiday buying, 3Com may
still be hurt by competition from Cisco and price cuts on 3Com's networking systems products,
used to link computers in corporate networks. Those products generate higher profit margins than
modems and connector cards. ''They still have to find a way to compete with Cisco in their
systems business,'' said Martin Pyykkonen, an analyst with CIBC Oppenheimer, who rates 3Com
''hold.''
Cabletron is expected to report a lower profit for the fourth straight quarter as sales of its older
products using an outdated technology plummet. Even so, the new, faster products it acquired
when it bought Yago Systems Inc. in January are expected to contribute significant revenue for the
quarter. ''It won't be a blowout quarter, but it will be an improvement'' from previous quarters,
said Farrokh Billimoria, an analyst at Hambrecht & Quist who rates Cabletron ''hold.''
The company is expected to earn 8 cents a share for the quarter ended in August, down from 37
cents a year earlier.
Xylan, Fore
Two smaller networking companies, Xylan Corp. and Fore Systems Inc., are expected to report
higher profits. Many analysts speculate that one or both may be an acquisition target of Lucent
Technologies Inc. or another large telephone-equipment maker.
Lucent and European rivals Ericsson AB and Alcatel SA have been pushing into the U.S.
networking market by buying smaller U.S. companies. ''Fore and Xylan have the technology the
big guys want,'' Pita Group's Johnson said.
Fore gets two-thirds of its revenue from sales of switches using ATM technology. Its sales have
been boosted by a delay in a standard for a rival technology.
Xylan makes expensive, sophisticated switches sold to corporations and has been helped by strong
European sales.
Still, Xylan, which gets 20 percent of its sales through a distribution agreement with Alcatel and
another 20 percent from a similar agreement with International Business Machines Corp., warned
last month that sales through the two companies will fall in the third quarter because of an
oversupply of Xylan products. Company Qtrly Year-Ago No. Analysts
Est. EPS Cisco Systems Inc.^ 0.33 0.26 30 3Com Corp.+ 0.20 0.47 29 Cabletron Systems Inc.&
0.08 0.37 21 Ascend Communications Inc.~ 0.31 0.20 24 Fore Systems Inc.) 0.14 0.07 15 Xylan
Corp.< 0.22 0.10 11 ^1st fiscal Qtr ends Oct. 24, 1998 +1st fiscal Qtr ends Aug. 28, 1998 &2nd
fiscal Qtr ends Aug. 30, 1998 ~2nd fiscal Qtr ends Sept. 30, 1998 )2nd fiscal Qtr ends Sept. 30,
1998 <3rd fiscal Qtr ends Sept. 30, 1998 All estimates according to First Call Corp. |
