Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 204.41

-1.0%

Nov 14 9:30 AM EST

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To: shane hartman who wrote (56905)	11/6/1998 10:35:00 PM
From: michael modeme	Read Replies (2) of 61433

The analyst was predicting a buyout of 14.4 billion, or around $69 per share. As a long-term ASND investor, looking out 5 years from now, assuming 35% growth in ASND's earnings and revenues and a corresponding amount of growth in the stock price, one gets around $224 -- or a 348% cummulative gain. If we assume a $69 buyout price from LU, and then around 22% growth from LU/ASND (weighted average of estimated growth rates), we wind up with $186 over the same 5-year period (of course there would be less volatility) which would give us a 272% cummulative gain over today's levels. Since this is my time frame, I hope that ASND doesn't get bought-out (I'll trade long-term huge gains for short-term small gains anytime). If we generalize this and solve for the time frame where there would be equal payoff we get: 2.44 years. So, if you want to hold on to your ASND shares for less than 2.44 years, then the takeover is favorable for you at $69, otherwise it is unfavorable given our assumptions. Cheers

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