Thread,
I had to go a long way back to the last time we discussed Ascend (I linked to it via this response). It was concerning the Stratus deal. Ascend sure is a hard company to invest in. You can read so many articles (I read two yesterday) about how they are PERFECTLY positioned to build the new, "networks of tomorrow." Then someone comes out with an article like the one below, and the stock gets smashed for weeks, maybe months.
I have no idea what to make of Ascend?? I thought the SS7 deal with Stratus was a smart move. The Cascade purchase, ultimately turned out to be a fantastic move but ASND got smashed after that one too. Wonder why so many analysts like to tear apart Ascend. Only thing I can figure is they buy on the dips. Analysts sure can move Ascend around.
You can still buy Ascend today, for what you could have bought it for almost 3 years ago. What a frustrating data networker to have an investment in.
Does anyone have an opinion of Ascend's products they would like to share? Here's what they do and make:
Products And Services
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1997 Sales / % of total
Access switching / 52
Core systems /35
Enterprise access / 9
Other / 4
Products
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Multimedia (Multiband family)
Network access
Network management (Navis family)
Network security (SecureConnect family)
Remote access (Pipeline family)
RoutersSwitches
Virtual private network (MAX family)
Thanks,
MikeM(From Florida)
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ALAMEDA, Calif. -- Ascend Communications' stock fell 10 percent Tuesday morning after analysts expressed concern about third-quarter earnings and the company's future competitiveness. ascend's (ASND) third-quarter income was $66.1 million, or 32 cents a share, vs. year-ago profits of $40.1 million, or 20 cents a share. Ascend said third-quarter sales rose 37 percent to $370.3 million from $270.4 million in the third-quarter of 1997.
But several analysts downgraded the shares, expressing concern about the company's future. Warburg Dillon Read analyst Nikos Theodosopoulos lowered his rating to "hold" from "buy," saying the company needs design wins overseas in order to meet 1999 estimates. Theodosopoulos also expects reduced margins going forward as the company integrates its Stratus Computer acquisition.
A 3-percent sequential decline in its core switching revenue also concerned investors. The company attributed the decrease to an estimated $15 million order delay. Analysts had expected revenue growth of about 20 percent during the quarter.
A charge of $8.7 million for write downs on loans to competitive local exchange carrier customers also drew a negative response. Ascend has been providing financing of capital equipment purchases to emerging carriers, triggering concerns about exposure to risk. BancBoston Robertson Stephens analyst Paul Johnson wrote in a research note Tuesday morning that the loans should be included in the quarter's financial performance as a cost of doing business. "The net result, in our opinion, is that earnings were 30 cents per share, not the 32 cents reported," Johnson said. Ascend told analysts it expects to extend more loans in the current quarter.
Citing the company's declining return on investment capital, Johnson said, "In light of the increased level of competition in the market, we suspect that we may never see the company's historical performance achieved again." Shares fell 4 11/16 to 43 3/16. But looking ahead to the end of 1998 and into 1999, Ascend expects revenue strength in its North American and European service provider markets.
Ascend said in a statement it's still "optimistic" that it will stay one of the "leading suppliers to service providers worldwide." The company also said it is "well positioned to deliver the integrated solutions network service providers are demanding today." |
