Gary,
Sources = Dell'oro, IDC, DataQuest, Vertical Group, CahnersInStat
Typically, I use multiple sources in each product category, conferring extensively with the analyst that put them together. Believe me I am well aware of the limitations of each firm and their methodology. Cisco provides roughly the same data to each firm, but the secret is that if you add up all of the data Cisco provides, you get a sales number that is 20% higher than actually reported sales. Yes, you are right, most companies try the same thing - but not all. Ascend, for example, because it essentially has three product lines, can't get away with it as easily, and according to every analyst I work with is the most forthcoming and accurate in its reporting.
I can state with confidence that Cisco did not sell well over $1B in WAN packet switches (Stratacom BPX, IPX, et al.) in FY1998. None of the data sources, even those who report back Cisco's numbers verbatim are even close - $800M appears to be the tops. Perhaps you are including sales of LAN ATM switches, which I have included in LAN switching, clearly the killer category for Cisco in FY98.
BTW just how many UBR and DSLAM units do you believe Cisco sold in FY1998? Given the rather meager installed base of cable modems and xDSL today and the head start enjoyed by several other vendors, I believe Cisco's revenues in those categories were not a significant contributor to FY98. Of course, I will agree with you that they WILL be significant in the future.
I have to admit I am supportive of BR's conclusion that Cisco deliberately attempts to mislead - there is a long story behind the footnote in the Dell'oro remote access numbers. I give credit to them for having the guts to make that call - 2600 and 3600 routers are routers, not remote access concentrators. I, however, do not fault Cisco for trying to tilt the game to their rules. Cisco could give management saavy lessons to any company.
As for Ascend, there is a ton of upside in consensus expectations for 1999. Management has guided to a very conservative $1.70 vs. consensus $1.67. Management's assumptions include: 61.5% gross margins (Too low given the new double density modem card for the MAX w/ 15-25% lower costs for the same price and recent price hikes on Stratus gear) 35.5% tax rate (ridiculous since they just expensed a $1m study inititiated to reduce the tax rate, and given a factory in Ireland that does not pay taxes). If Ascend just makes its guidance, it will show YoY EPS growth of 42%. Not too shabby. |
