Pat, I read the ML report (well researched)by Jo Bellace, on both CSCO and ASND. I would stay with ASND.
Here are my reasons.
1. ASND gets 80% of revenues from Service providers(ISP+Carriers) CSCO gets 30% from service providers(from ML). Everyone knows where the growth going forward into 1999 is. ML, says the service providers are going to increase spending by 50-60% next year primarily in building next-generation networks.
2. If you use commonsense, it is easy for 1.5 billion revenue company(ASND) to grow by 30-40% than a company with 10-12 billion revenue company(CSCO), with question about slowing corporate spending next year, where they get 70% of revenues. In absolute dollars they may have more sales to service providers, but as percentage of the sales its only 30% of their revenues as per ML report.
3. The trend of banks, enterprises outsourcing their networks to Carriers and service providers is also a positive for ASND and a big negative for CSCO, since they loose one end to gain on the other end. Where as ASND will gain without loosing.
4. In summary ASND is a pure play in the NEXT GENERATION PUBLIC NETWORK, where as CSCO is a 30-40% play.
Both should do well, but ASND should do better based on the above + it is trading at discount for its growth rate, in comparison to CSCO. ASND will get its respect when they deliver stellar growth of revenue next year projected at 2.3 billion dollars. Confidence of the street will be regained.
On NOV 2, 1999, ASND if remains independent will significantly outperform CSCO and the market in general.
BR |
