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Technology Stocks : Ascend Communications-News Only!!! (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Finder who wrote (475)	11/5/1997 6:46:00 PM
From: Maverick	Respond to of 1629

ALAMEDA, Calif., Nov 5 (Reuters) - Ascend Communications Inc's ASND.O treasurer said Wednesday sales will increase between five and 10 percent each quarter sequentially for the next two quarters. Sequential revenue growth will increase closer to 10 percent in the second half of 1998, said Bernie Schneider, Ascend treasurer and corporate vice president. "We see revenue increasing in the mid- to high single-digit range for the next couple of quarters," he said. Schneider also said Ascend likely will cut the list prices of its access concentrators -- a telecommunications device that accounts for about 50 percent of Ascend's sales -- by 20 to 30 percent in the next few quarters. But the company expects to offset the price cut with a decrease in costs, he said. Ascend earlier this week told investors that consolidation among Internet service providers, its chief customers, is causing "fluctuations" in demand for its devices, but overall demand remains strong. "We don't believe that the fluctuations will impede our ability to show sequential growth," Schneider said. Ascend has seen its sales growth slow in recent months amid steeper competition and slower demand abroad. In the third quarter, the company's revenue and profits were significantly below what Wall Street expected. At the American Electronics Association conference in San Diego earlier this week, Ascend executives told investors they remain bullish about Ascend's long-term outlook, but sales growth may be slower in coming quarters than the rate of growth the company has reported in recent quarters.

To: Finder who wrote (475)	11/5/1997 8:07:00 PM
From: Maverick	Read Replies (1) \| Respond to of 1629

ASND's Earning calculation for 9704, annual rev growth, PEG ratio According to Bernie Schneider, ASND's treasurer, sales will increase between five and 10 percent each quarter sequentially for the next two quarters, and closer to 10 percent in the second half of 1998, which is consistent with Mike Ashby's saying that he expects the company to meet analyst estimates of 23 cents a share in the current quarter, which ends Dec. 31, on revenue of $280 million to $290 million. ($290 MM - $270 MM)/$270 MM = 7.4%. How does this translate to the compounded annualized rev. growth ? (1+0.074) * (1+0.074) * (1+0.1) * (1+0.1) = 1.4 or 40 % annualized rev. growth outperforming the whole NW sector at 30%. Earning calculation for 9704 (in 000's) Revenue 290,000 (The rev. is cut off at this level to build backlog) Cost of sale 37 % (Ashby said Gross margin is 62 - 64%) R&D 14 % (The highest was 15% historically) Sale & Mktg 23 % (The highest was 24.6% historically) G&A 3 % (The highest was 3% historically) Op. Margin 100 - 37 - 14 - 23 - 3 = 23 % ''The company will be able to maintain its (profit) margins through both cost reductions and changing the discount levels that are offered to some of their major customers,'' said Ashby. Op. Income 290,000 * 0.23 = 66,700 Interest Income 6,161 Income before tax 72,861 Tax rate 37 % (historical) Net income 72,861 * (1 - 0.37) = 45,902.43 Shares outstanding 200,000 EPS 45,902.43 / 200,000 = 0.23 = consensus estimate Forward PE is $26 / 1.15 (First Call's FY98 consensus) = 22.6 According to First Call, the 5-yr median growth rate is 38% (25 - 50%), the PEG ratio is 22.6 / 38 = 0.6 which indicates an extreme undervalue situation. Potential Upside ML believes that ASND will come out with new products with lower list prices in 1998, which will be consistent with Ascend achieving 25% operating margins. Ashby expects to meet estimates of $1.15 to $1.20 a share in earnings next year. Forward PE = 26 / 1.2 = 21.7. PEG ratio = 21.7 / 38 = 0.57.