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

To: Joseph Pareti who wrote (24003)	11/19/1997 4:09:00 PM
From: Inga	Respond to of 61433

Revenue growth has not deviated too much from past growth history. Eps growth and net income has been eroded somewhat in fiscal year 1997 as you mentioned but we should wait until December earnings are out to see if this is a temporary shortfall or the beginning of a change in fundamental. In late July, Ejabat "thought" that the quarters are back end loaded. His time frame may be off by 1-2 months so we just have to wait and see. Ascend should have earned total 60-65 cents for Q3+4 of 1997. As we know, only 20 cents were earned in Q3. If Ascend makes 30-40 cents in Q4, then the fundamentals are still intact. If the earnings are lower than 30 cents like consensus estimate (23), we should give Ejabat another quarter before deciding if the fundamental is actually going downhill. Net income remains flat due to the merging with Cascade or because Ascend is trying to break the 1.0B sales barrier. If you look at high-tech companies, there are something about the 1B and 4B sales barriers which limit growth at this level for a prolonged period. A lot of companies stumble at these barriers or just have flat earnings due to eroded margins (product price reduction in Ascend case). Ejabat managed to sustain Ascend growth for 12 sucessive quarters. He stumbled now but to be fair, give him another quarter or two before crucifying him. You cannot expect a warrior to win all battles. As long as he wins the war, that's all it counts. Cheers, Lanny Dao.